Correlation Between Wah Nobel and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Agha Steel 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 Wah Nobel and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Nobel Chemicals and Agha Steel Industries, you can compare the effects of market volatilities on Wah Nobel and Agha Steel 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 Wah Nobel with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Agha Steel.
Diversification Opportunities for Wah Nobel and Agha Steel
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wah and Agha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and Wah Nobel 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 Wah Nobel Chemicals are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Wah Nobel i.e., Wah Nobel and Agha Steel go up and down completely randomly.
Pair Corralation between Wah Nobel and Agha Steel
Assuming the 90 days trading horizon Wah Nobel Chemicals is expected to under-perform the Agha Steel. In addition to that, Wah Nobel is 1.7 times more volatile than Agha Steel Industries. It trades about -0.32 of its total potential returns per unit of risk. Agha Steel Industries is currently generating about -0.29 per unit of volatility. If you would invest 1,090 in Agha Steel Industries on November 4, 2024 and sell it today you would lose (106.00) from holding Agha Steel Industries or give up 9.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Agha Steel Industries
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Agha Steel Industries |
Wah Nobel and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Agha Steel
The main advantage of trading using opposite Wah Nobel and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| Wah Nobel vs. Crescent Star Insurance | Wah Nobel vs. Premier Insurance | Wah Nobel vs. Shaheen Insurance | Wah Nobel vs. United Insurance |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Shadab Textile Mills | Agha Steel vs. Century 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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