Correlation Between Shaheen Insurance and Masood Textile

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

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

Diversification Opportunities for Shaheen Insurance and Masood Textile

-0.07

Correlation Coefficient

Shaheen Insurance  Masood Textile

Good diversification

The 3 months correlation between Shaheen and Masood is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills and Shaheen Insurance 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 Shaheen Insurance are associated (or correlated) with Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Masood Textile go up and down completely randomly.

Pair Corralation between Shaheen Insurance and Masood Textile

Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 0.9 times more return on investment than Masood Textile. However, Shaheen Insurance is 1.11 times less risky than Masood Textile. It trades about 0.09 of its potential returns per unit of risk. Masood Textile Mills is currently generating about 0.05 per unit of risk. If you would invest  632.00  in Shaheen Insurance on December 29, 2024 and sell it today you would earn a total of  114.00  from holding Shaheen Insurance or generate 18.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.33%
Values	Daily Returns

Shaheen Insurance  vs.  Masood Textile Mills

Shaheen Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Masood Textile Mills

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Masood Textile Mills are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masood Textile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shaheen Insurance and Masood Textile

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

The idea behind Shaheen Insurance and Masood Textile 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.