Correlation Between Roshan Packages and Aisha Steel

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

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

Diversification Opportunities for Roshan Packages and Aisha Steel

0.62

Correlation Coefficient

Roshan Packages  Aisha Steel

Poor diversification

The 3 months correlation between Roshan and Aisha is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Roshan Packages 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 Roshan 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 Roshan Packages 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 Roshan Packages i.e., Roshan Packages and Aisha Steel go up and down completely randomly.

Pair Corralation between Roshan Packages and Aisha Steel

Assuming the 90 days trading horizon Roshan Packages is expected to under-perform the Aisha Steel. But the stock apears to be less risky and, when comparing its historical volatility, Roshan Packages is 1.46 times less risky than Aisha Steel. The stock trades about -0.11 of its potential returns per unit of risk. The Aisha Steel Mills is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,104  in Aisha Steel Mills on December 21, 2024 and sell it today you would lose (106.00) from holding Aisha Steel Mills or give up 9.6% of portfolio value over 90 days.

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

Roshan Packages  vs.  Aisha Steel Mills

Roshan Packages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roshan Packages 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.

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Roshan Packages and Aisha Steel

The main advantage of trading using opposite Roshan Packages and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roshan Packages 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 Roshan Packages 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.