Correlation Between President Automobile and Rojana Industrial

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

By analyzing existing cross correlation between President Automobile Industries and Rojana Industrial Park, you can compare the effects of market volatilities on President Automobile and Rojana Industrial 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 President Automobile with a short position of Rojana Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and Rojana Industrial.

Diversification Opportunities for President Automobile and Rojana Industrial

-0.08

Correlation Coefficient

President Automobile  Rojana Industrial

Good diversification

The 3 months correlation between President and Rojana is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park and President Automobile 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 President Automobile Industries are associated (or correlated) with Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of President Automobile i.e., President Automobile and Rojana Industrial go up and down completely randomly.

Pair Corralation between President Automobile and Rojana Industrial

Assuming the 90 days trading horizon President Automobile Industries is expected to generate 0.81 times more return on investment than Rojana Industrial. However, President Automobile Industries is 1.23 times less risky than Rojana Industrial. It trades about 0.07 of its potential returns per unit of risk. Rojana Industrial Park is currently generating about -0.05 per unit of risk. If you would invest  135.00  in President Automobile Industries on December 23, 2024 and sell it today you would earn a total of  7.00  from holding President Automobile Industries or generate 5.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

President Automobile Industrie  vs.  Rojana Industrial Park

President Automobile

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in President Automobile Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, President Automobile is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Rojana Industrial Park

Risk-Adjusted Performance

Very Weak

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

Pair Trading with President Automobile and Rojana Industrial

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

The idea behind President Automobile Industries and Rojana Industrial Park 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.