Correlation Between Nimir Industrial and Shaheen Insurance

Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and Shaheen Insurance 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 Nimir Industrial and Shaheen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Nimir Industrial and Shaheen Insurance

0.9

Correlation Coefficient

Nimir Industrial  Shaheen Insurance

Almost no diversification

The 3 months correlation between Nimir and Shaheen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and Nimir Industrial 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 Nimir Industrial Chemical are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Shaheen Insurance go up and down completely randomly.

Pair Corralation between Nimir Industrial and Shaheen Insurance

Assuming the 90 days trading horizon Nimir Industrial is expected to generate 1.92 times less return on investment than Shaheen Insurance. But when comparing it to its historical volatility, Nimir Industrial Chemical is 1.42 times less risky than Shaheen Insurance. It trades about 0.18 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  421.00  in Shaheen Insurance on September 29, 2024 and sell it today you would earn a total of  225.00  from holding Shaheen Insurance or generate 53.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Nimir Industrial Chemical  vs.  Shaheen Insurance

Nimir Industrial Chemical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nimir Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Shaheen Insurance

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nimir Industrial and Shaheen Insurance

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

The idea behind Nimir Industrial Chemical and Shaheen 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.