Correlation Between Aisha Steel and Pakistan Cables
Can any of the company-specific risk be diversified away by investing in both Aisha Steel and Pakistan Cables 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 Aisha Steel and Pakistan Cables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aisha Steel Mills and Pakistan Cables, you can compare the effects of market volatilities on Aisha Steel and Pakistan Cables 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 Aisha Steel with a short position of Pakistan Cables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Pakistan Cables.
Diversification Opportunities for Aisha Steel and Pakistan Cables
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aisha and Pakistan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and Pakistan Cables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Cables and Aisha Steel 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 Aisha Steel Mills are associated (or correlated) with Pakistan Cables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Cables has no effect on the direction of Aisha Steel i.e., Aisha Steel and Pakistan Cables go up and down completely randomly.
Pair Corralation between Aisha Steel and Pakistan Cables
Assuming the 90 days trading horizon Aisha Steel Mills is expected to generate 1.02 times more return on investment than Pakistan Cables. However, Aisha Steel is 1.02 times more volatile than Pakistan Cables. It trades about 0.22 of its potential returns per unit of risk. Pakistan Cables is currently generating about 0.1 per unit of risk. If you would invest 683.00 in Aisha Steel Mills on October 25, 2024 and sell it today you would earn a total of 420.00 from holding Aisha Steel Mills or generate 61.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aisha Steel Mills vs. Pakistan Cables
Performance |
Timeline |
Aisha Steel Mills |
Pakistan Cables |
Aisha Steel and Pakistan Cables Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aisha Steel and Pakistan Cables
The main advantage of trading using opposite Aisha Steel and Pakistan Cables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel position performs unexpectedly, Pakistan Cables 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 Pakistan Cables will offset losses from the drop in Pakistan Cables' long position.Aisha Steel vs. Fateh Sports Wear | Aisha Steel vs. WorldCall Telecom | Aisha Steel vs. Fauji Foods | Aisha Steel vs. 786 Investment Limited |
Pakistan Cables vs. Pakistan Reinsurance | Pakistan Cables vs. Orient Rental Modaraba | Pakistan Cables vs. JS Global Banking | Pakistan Cables vs. Bank of Punjab |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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