Correlation Between Sindh Modaraba and Altern Energy

Can any of the company-specific risk be diversified away by investing in both Sindh Modaraba and Altern Energy 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 Altern Energy 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 Altern Energy, you can compare the effects of market volatilities on Sindh Modaraba and Altern Energy 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 Altern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sindh Modaraba and Altern Energy.

Diversification Opportunities for Sindh Modaraba and Altern Energy

0.55

Correlation Coefficient

Sindh Modaraba  Altern Energy

Very weak diversification

The 3 months correlation between Sindh and Altern is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sindh Modaraba Management and Altern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altern Energy 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 Altern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altern Energy has no effect on the direction of Sindh Modaraba i.e., Sindh Modaraba and Altern Energy go up and down completely randomly.

Pair Corralation between Sindh Modaraba and Altern Energy

Assuming the 90 days trading horizon Sindh Modaraba is expected to generate 1.31 times less return on investment than Altern Energy. But when comparing it to its historical volatility, Sindh Modaraba Management is 1.43 times less risky than Altern Energy. It trades about 0.07 of its potential returns per unit of risk. Altern Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Altern Energy on December 23, 2024 and sell it today you would earn a total of  159.00  from holding Altern Energy or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Sindh Modaraba Management  vs.  Altern Energy

Sindh Modaraba Management

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sindh Modaraba Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Sindh Modaraba disclosed solid returns over the last few months and may actually be approaching a breakup point.

Altern Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altern Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Altern Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sindh Modaraba and Altern Energy

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

The idea behind Sindh Modaraba Management and Altern Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.