Correlation Between Invest Capital and Gul Ahmed

Can any of the company-specific risk be diversified away by investing in both Invest Capital and Gul Ahmed 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 Invest Capital and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invest Capital Investment and Gul Ahmed Textile, you can compare the effects of market volatilities on Invest Capital and Gul Ahmed 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 Invest Capital with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invest Capital and Gul Ahmed.

Diversification Opportunities for Invest Capital and Gul Ahmed

0.39

Correlation Coefficient

Invest Capital  Gul Ahmed

Weak diversification

The 3 months correlation between Invest and Gul is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Invest Capital Investment and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Invest Capital 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 Invest Capital Investment are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Invest Capital i.e., Invest Capital and Gul Ahmed go up and down completely randomly.

Pair Corralation between Invest Capital and Gul Ahmed

Assuming the 90 days trading horizon Invest Capital Investment is expected to generate 1.45 times more return on investment than Gul Ahmed. However, Invest Capital is 1.45 times more volatile than Gul Ahmed Textile. It trades about 0.08 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.07 per unit of risk. If you would invest  146.00  in Invest Capital Investment on October 20, 2024 and sell it today you would earn a total of  8.00  from holding Invest Capital Investment or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Invest Capital Investment  vs.  Gul Ahmed Textile

Invest Capital Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invest Capital Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Invest Capital is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Gul Ahmed Textile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gul Ahmed Textile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gul Ahmed sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invest Capital and Gul Ahmed

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

The idea behind Invest Capital Investment and Gul Ahmed Textile 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.