Correlation Between Packages and Agha Steel

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

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

Diversification Opportunities for Packages and Agha Steel

-0.76

Correlation Coefficient

Packages  Agha Steel

Pay attention - limited upside

The 3 months correlation between Packages and Agha is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Packages and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and Packages 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 Packages are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Packages i.e., Packages and Agha Steel go up and down completely randomly.

Pair Corralation between Packages and Agha Steel

Assuming the 90 days trading horizon Packages is expected to under-perform the Agha Steel. But the stock apears to be less risky and, when comparing its historical volatility, Packages is 1.11 times less risky than Agha Steel. The stock trades about -0.24 of its potential returns per unit of risk. The Agha Steel Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,079  in Agha Steel Industries on October 11, 2024 and sell it today you would lose (28.00) from holding Agha Steel Industries or give up 2.59% of portfolio value over 90 days.

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

Packages  vs.  Agha Steel Industries

Packages

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packages are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Packages sustained solid returns over the last few months and may actually be approaching a breakup point.

Agha Steel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agha Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Packages and Agha Steel

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

The idea behind Packages and Agha Steel Industries 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.