Correlation Between Wah Nobel and Oil
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Oil 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 Oil 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 Oil and Gas, you can compare the effects of market volatilities on Wah Nobel and Oil 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 Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Oil.
Diversification Opportunities for Wah Nobel and Oil
Modest diversification
The 3 months correlation between Wah and Oil is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas 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 Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Wah Nobel i.e., Wah Nobel and Oil go up and down completely randomly.
Pair Corralation between Wah Nobel and Oil
Assuming the 90 days trading horizon Wah Nobel is expected to generate 1.47 times less return on investment than Oil. In addition to that, Wah Nobel is 1.04 times more volatile than Oil and Gas. It trades about 0.06 of its total potential returns per unit of risk. Oil and Gas is currently generating about 0.09 per unit of volatility. If you would invest 7,831 in Oil and Gas on August 27, 2024 and sell it today you would earn a total of 11,638 from holding Oil and Gas or generate 148.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.63% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Oil and Gas
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Oil and Gas |
Wah Nobel and Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Oil
The main advantage of trading using opposite Wah Nobel and Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Oil 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 Oil will offset losses from the drop in Oil'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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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