Correlation Between Invest Capital and Shell Pakistan

Can any of the company-specific risk be diversified away by investing in both Invest Capital and Shell Pakistan 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 Shell Pakistan 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 Shell Pakistan, you can compare the effects of market volatilities on Invest Capital and Shell Pakistan 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 Shell Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invest Capital and Shell Pakistan.

Diversification Opportunities for Invest Capital and Shell Pakistan

-0.02

Correlation Coefficient

Invest Capital  Shell Pakistan

Good diversification

The 3 months correlation between Invest and Shell is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Invest Capital Investment and Shell Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell Pakistan 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 Shell Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell Pakistan has no effect on the direction of Invest Capital i.e., Invest Capital and Shell Pakistan go up and down completely randomly.

Pair Corralation between Invest Capital and Shell Pakistan

Assuming the 90 days trading horizon Invest Capital Investment is expected to generate 1.0 times more return on investment than Shell Pakistan. However, Invest Capital Investment is 1.0 times less risky than Shell Pakistan. It trades about -0.06 of its potential returns per unit of risk. Shell Pakistan is currently generating about -0.1 per unit of risk. If you would invest  160.00  in Invest Capital Investment on December 30, 2024 and sell it today you would lose (20.00) from holding Invest Capital Investment or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.84%
Values	Daily Returns

Invest Capital Investment  vs.  Shell Pakistan

Invest Capital Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invest Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Shell Pakistan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shell Pakistan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Invest Capital and Shell Pakistan

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

The idea behind Invest Capital Investment and Shell Pakistan 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.