Correlation Between Wah Nobel and Attock Petroleum
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Attock Petroleum 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 Attock Petroleum 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 Attock Petroleum, you can compare the effects of market volatilities on Wah Nobel and Attock Petroleum 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 Attock Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Attock Petroleum.
Diversification Opportunities for Wah Nobel and Attock Petroleum
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wah and Attock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Attock Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Attock Petroleum 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 Attock Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Attock Petroleum has no effect on the direction of Wah Nobel i.e., Wah Nobel and Attock Petroleum go up and down completely randomly.
Pair Corralation between Wah Nobel and Attock Petroleum
Assuming the 90 days trading horizon Wah Nobel is expected to generate 2.9 times less return on investment than Attock Petroleum. But when comparing it to its historical volatility, Wah Nobel Chemicals is 1.3 times less risky than Attock Petroleum. It trades about 0.17 of its potential returns per unit of risk. Attock Petroleum is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 44,684 in Attock Petroleum on September 12, 2024 and sell it today you would earn a total of 8,610 from holding Attock Petroleum or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Attock Petroleum
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Attock Petroleum |
Wah Nobel and Attock Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Attock Petroleum
The main advantage of trading using opposite Wah Nobel and Attock Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Attock Petroleum 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 Attock Petroleum will offset losses from the drop in Attock Petroleum's long position.| Wah Nobel vs. Masood Textile Mills | Wah Nobel vs. Fauji Foods | Wah Nobel vs. KSB Pumps | Wah Nobel vs. Mari Petroleum |
| Attock Petroleum vs. Invest Capital Investment | Attock Petroleum vs. Engro Polymer Chemicals | Attock Petroleum vs. Sardar Chemical Industries | Attock Petroleum vs. Premier 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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