Correlation Between Masood Textile and Aisha Steel

Can any of the company-specific risk be diversified away by investing in both Masood Textile and Aisha Steel 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 Masood Textile and Aisha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Masood Textile Mills and Aisha Steel Mills, you can compare the effects of market volatilities on Masood Textile and Aisha Steel 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 Masood Textile with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Aisha Steel.

Diversification Opportunities for Masood Textile and Aisha Steel

-0.41

Correlation Coefficient

Masood Textile  Aisha Steel

Very good diversification

The 3 months correlation between Masood and Aisha is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills and Masood Textile 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 Masood Textile Mills are associated (or correlated) with Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of Masood Textile i.e., Masood Textile and Aisha Steel go up and down completely randomly.

Pair Corralation between Masood Textile and Aisha Steel

Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 1.43 times more return on investment than Aisha Steel. However, Masood Textile is 1.43 times more volatile than Aisha Steel Mills. It trades about 0.05 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about -0.12 per unit of risk. If you would invest  4,981  in Masood Textile Mills on December 30, 2024 and sell it today you would earn a total of  352.00  from holding Masood Textile Mills or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.78%
Values	Daily Returns

Masood Textile Mills  vs.  Aisha Steel Mills

Masood Textile Mills

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Masood Textile Mills are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masood Textile sustained solid returns over the last few months and may actually be approaching a breakup point.

Aisha Steel Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aisha Steel Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Masood Textile and Aisha Steel

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

The idea behind Masood Textile Mills and Aisha Steel Mills 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..