Correlation Between Wah Nobel and Treet
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Treet 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 Treet 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 Treet, you can compare the effects of market volatilities on Wah Nobel and Treet 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 Treet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Treet.
Diversification Opportunities for Wah Nobel and Treet
Poor diversification
The 3 months correlation between Wah and Treet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Treet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treet 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 Treet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treet has no effect on the direction of Wah Nobel i.e., Wah Nobel and Treet go up and down completely randomly.
Pair Corralation between Wah Nobel and Treet
Assuming the 90 days trading horizon Wah Nobel Chemicals is expected to generate 0.91 times more return on investment than Treet. However, Wah Nobel Chemicals is 1.1 times less risky than Treet. It trades about 0.06 of its potential returns per unit of risk. Treet is currently generating about 0.03 per unit of risk. If you would invest 18,369 in Wah Nobel Chemicals on September 14, 2024 and sell it today you would earn a total of 5,631 from holding Wah Nobel Chemicals or generate 30.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.29% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Treet
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Treet |
Wah Nobel and Treet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Treet
The main advantage of trading using opposite Wah Nobel and Treet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Treet 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 Treet will offset losses from the drop in Treet's long position.| Wah Nobel vs. Masood Textile Mills | Wah Nobel vs. Fauji Foods | Wah Nobel vs. KSB Pumps | Wah Nobel vs. Mari Petroleum |
| Treet vs. Agha Steel Industries | Treet vs. Wah Nobel Chemicals | Treet vs. Ittehad Chemicals | Treet vs. Amreli Steels |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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