Correlation Between Wah Nobel and Hub Power
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Hub Power 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 Hub Power 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 Hub Power, you can compare the effects of market volatilities on Wah Nobel and Hub Power 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 Hub Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Hub Power.
Diversification Opportunities for Wah Nobel and Hub Power
Good diversification
The 3 months correlation between Wah and Hub is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Hub Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Power 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 Hub Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Power has no effect on the direction of Wah Nobel i.e., Wah Nobel and Hub Power go up and down completely randomly.
Pair Corralation between Wah Nobel and Hub Power
Assuming the 90 days trading horizon Wah Nobel is expected to generate 1.43 times less return on investment than Hub Power. In addition to that, Wah Nobel is 1.41 times more volatile than Hub Power. It trades about 0.05 of its total potential returns per unit of risk. Hub Power is currently generating about 0.1 per unit of volatility. If you would invest 4,675 in Hub Power on August 27, 2024 and sell it today you would earn a total of 6,283 from holding Hub Power or generate 134.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.91% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Hub Power
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Hub Power |
Wah Nobel and Hub Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Hub Power
The main advantage of trading using opposite Wah Nobel and Hub Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Hub Power 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 Hub Power will offset losses from the drop in Hub Power's long position.| Wah Nobel vs. Unilever Pakistan Foods | Wah Nobel vs. WorldCall Telecom | Wah Nobel vs. TPL Insurance | Wah Nobel vs. Air Link Communication |
| Hub Power vs. Security Investment Bank | Hub Power vs. Sindh Modaraba Management | Hub Power vs. Engro Polymer Chemicals | Hub Power vs. Pakistan Telecommunication |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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