Correlation Between Sindh Modaraba and Al Ghazi

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

By analyzing existing cross correlation between Sindh Modaraba Management and Al Ghazi Tractors, you can compare the effects of market volatilities on Sindh Modaraba and Al Ghazi 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 Sindh Modaraba with a short position of Al Ghazi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sindh Modaraba and Al Ghazi.

Diversification Opportunities for Sindh Modaraba and Al Ghazi

-0.69

Correlation Coefficient

Sindh Modaraba  Al Ghazi

Excellent diversification

The 3 months correlation between Sindh and AGTL is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sindh Modaraba Management and Al Ghazi Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Ghazi Tractors and Sindh Modaraba 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 Sindh Modaraba Management are associated (or correlated) with Al Ghazi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Ghazi Tractors has no effect on the direction of Sindh Modaraba i.e., Sindh Modaraba and Al Ghazi go up and down completely randomly.

Pair Corralation between Sindh Modaraba and Al Ghazi

Assuming the 90 days trading horizon Sindh Modaraba Management is expected to generate 1.17 times more return on investment than Al Ghazi. However, Sindh Modaraba is 1.17 times more volatile than Al Ghazi Tractors. It trades about 0.04 of its potential returns per unit of risk. Al Ghazi Tractors is currently generating about -0.02 per unit of risk. 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 Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sindh Modaraba Management  vs.  Al Ghazi Tractors

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.

Al Ghazi Tractors

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sindh Modaraba and Al Ghazi

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

The idea behind Sindh Modaraba Management and Al Ghazi Tractors 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.