Correlation Between Nimir Industrial and Sindh Modaraba

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

Diversification Opportunities for Nimir Industrial and Sindh Modaraba

0.11

Correlation Coefficient

Nimir Industrial  Sindh Modaraba

Average diversification

The 3 months correlation between Nimir and Sindh is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Sindh Modaraba Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sindh Modaraba Management 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 Sindh Modaraba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sindh Modaraba Management has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Sindh Modaraba go up and down completely randomly.

Pair Corralation between Nimir Industrial and Sindh Modaraba

Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to under-perform the Sindh Modaraba. But the stock apears to be less risky and, when comparing its historical volatility, Nimir Industrial Chemical is 1.16 times less risky than Sindh Modaraba. The stock trades about -0.01 of its potential returns per unit of risk. The Sindh Modaraba Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Sindh Modaraba Management on December 30, 2024 and sell it today you would earn a total of  55.00  from holding Sindh Modaraba Management or generate 5.42% return on investment over 90 days.

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

Nimir Industrial Chemical  vs.  Sindh Modaraba Management

Nimir Industrial Chemical

Risk-Adjusted Performance

Very Weak

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

Sindh Modaraba Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sindh Modaraba Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Sindh Modaraba may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nimir Industrial and Sindh Modaraba

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

The idea behind Nimir Industrial Chemical and Sindh Modaraba Management 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.