Correlation Between Sitara Chemical and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical 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 Sitara Chemical and Aisha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitara Chemical Industries and Aisha Steel Mills, you can compare the effects of market volatilities on Sitara Chemical 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 Sitara Chemical with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and Aisha Steel.
Diversification Opportunities for Sitara Chemical and Aisha Steel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sitara and Aisha is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries 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 Sitara Chemical 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 Sitara Chemical Industries 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 Sitara Chemical i.e., Sitara Chemical and Aisha Steel go up and down completely randomly.
Pair Corralation between Sitara Chemical and Aisha Steel
Assuming the 90 days trading horizon Sitara Chemical is expected to generate 1.48 times less return on investment than Aisha Steel. But when comparing it to its historical volatility, Sitara Chemical Industries is 1.13 times less risky than Aisha Steel. It trades about 0.07 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 867.00 in Aisha Steel Mills on December 2, 2024 and sell it today you would earn a total of 166.00 from holding Aisha Steel Mills or generate 19.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.65% |
Values | Daily Returns |
Sitara Chemical Industries vs. Aisha Steel Mills
Performance |
Timeline |
Sitara Chemical Indu |
Aisha Steel Mills |
Sitara Chemical and Aisha Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sitara Chemical and Aisha Steel
The main advantage of trading using opposite Sitara Chemical and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical 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.Sitara Chemical vs. Air Link Communication | Sitara Chemical vs. Invest Capital Investment | Sitara Chemical vs. Ghani Chemical Industries | Sitara Chemical vs. National Foods |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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