Correlation Between Ghandhara Automobile and East West

Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and East West 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 Ghandhara Automobile and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ghandhara Automobile and East West Insurance, you can compare the effects of market volatilities on Ghandhara Automobile and East West 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 Ghandhara Automobile with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and East West.

Diversification Opportunities for Ghandhara Automobile and East West

0.0

Correlation Coefficient

Ghandhara Automobile  East West

Pay attention - limited upside

The 3 months correlation between Ghandhara and East is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Insurance and Ghandhara Automobile 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 Ghandhara Automobile are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Insurance has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and East West go up and down completely randomly.

Pair Corralation between Ghandhara Automobile and East West

If you would invest  28,712  in Ghandhara Automobile on December 30, 2024 and sell it today you would earn a total of  19,859  from holding Ghandhara Automobile or generate 69.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	17.46%
Values	Daily Returns

Ghandhara Automobile  vs.  East West Insurance

Ghandhara Automobile

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ghandhara Automobile are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ghandhara Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

East West Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days East West Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, East West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ghandhara Automobile and East West

The main advantage of trading using opposite Ghandhara Automobile and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.

The idea behind Ghandhara Automobile and East West Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.