Correlation Between Unity Foods and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both Unity Foods and Roshan Packages at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Unity Foods and Roshan Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Foods and Roshan Packages, you can compare the effects of market volatilities on Unity Foods and Roshan Packages and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Unity Foods with a short position of Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Foods and Roshan Packages.
Diversification Opportunities for Unity Foods and Roshan Packages
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unity and Roshan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Unity Foods and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages and Unity Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Unity Foods are associated (or correlated) with Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of Unity Foods i.e., Unity Foods and Roshan Packages go up and down completely randomly.
Pair Corralation between Unity Foods and Roshan Packages
Assuming the 90 days trading horizon Unity Foods is expected to generate 1.11 times less return on investment than Roshan Packages. But when comparing it to its historical volatility, Unity Foods is 1.17 times less risky than Roshan Packages. It trades about 0.09 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 828.00 in Roshan Packages on September 1, 2024 and sell it today you would earn a total of 911.00 from holding Roshan Packages or generate 110.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unity Foods vs. Roshan Packages
Performance |
| Timeline |
| Unity Foods |
| Roshan Packages |
Unity Foods and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Foods and Roshan Packages
The main advantage of trading using opposite Unity Foods and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Foods position performs unexpectedly, Roshan Packages can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Roshan Packages will offset losses from the drop in Roshan Packages' long position.| Unity Foods vs. Reliance Insurance Co | Unity Foods vs. Atlas Insurance | Unity Foods vs. Matco Foods | Unity Foods vs. East West Insurance |
| Roshan Packages vs. Data Agro | Roshan Packages vs. Hi Tech Lubricants | Roshan Packages vs. Pakistan Telecommunication | Roshan Packages vs. Adamjee Insurance |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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