Correlation Between Unilever Pakistan and Wah Nobel
Can any of the company-specific risk be diversified away by investing in both Unilever Pakistan and Wah Nobel 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 Unilever Pakistan and Wah Nobel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Pakistan Foods and Wah Nobel Chemicals, you can compare the effects of market volatilities on Unilever Pakistan and Wah Nobel 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 Unilever Pakistan with a short position of Wah Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and Wah Nobel.
Diversification Opportunities for Unilever Pakistan and Wah Nobel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Unilever and Wah is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals and Unilever Pakistan 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 Unilever Pakistan Foods are associated (or correlated) with Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of Unilever Pakistan i.e., Unilever Pakistan and Wah Nobel go up and down completely randomly.
Pair Corralation between Unilever Pakistan and Wah Nobel
Assuming the 90 days trading horizon Unilever Pakistan Foods is expected to under-perform the Wah Nobel. But the stock apears to be less risky and, when comparing its historical volatility, Unilever Pakistan Foods is 1.08 times less risky than Wah Nobel. The stock trades about -0.01 of its potential returns per unit of risk. The Wah Nobel Chemicals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,149 in Wah Nobel Chemicals on August 29, 2024 and sell it today you would earn a total of 6,958 from holding Wah Nobel Chemicals or generate 45.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 79.2% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. Wah Nobel Chemicals
Performance |
| Timeline |
| Unilever Pakistan Foods |
| Wah Nobel Chemicals |
Unilever Pakistan and Wah Nobel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and Wah Nobel
The main advantage of trading using opposite Unilever Pakistan and Wah Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan position performs unexpectedly, Wah Nobel 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 Wah Nobel will offset losses from the drop in Wah Nobel's long position.| Unilever Pakistan vs. Masood Textile Mills | Unilever Pakistan vs. Fauji Foods | Unilever Pakistan vs. KSB Pumps | Unilever Pakistan vs. Mari Petroleum |
| Wah Nobel vs. Masood Textile Mills | Wah Nobel vs. Fauji Foods | Wah Nobel vs. KSB Pumps | Wah Nobel vs. Mari Petroleum |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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