Correlation Between Thatta Cement and Shaheen Insurance

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

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

Diversification Opportunities for Thatta Cement and Shaheen Insurance

0.42

Correlation Coefficient

Thatta Cement  Shaheen Insurance

Very weak diversification

The 3 months correlation between Thatta and Shaheen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and Thatta Cement 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 Thatta Cement are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Thatta Cement i.e., Thatta Cement and Shaheen Insurance go up and down completely randomly.

Pair Corralation between Thatta Cement and Shaheen Insurance

Assuming the 90 days trading horizon Thatta Cement is expected to generate 14.6 times less return on investment than Shaheen Insurance. In addition to that, Thatta Cement is 1.25 times more volatile than Shaheen Insurance. It trades about 0.0 of its total potential returns per unit of risk. Shaheen Insurance is currently generating about 0.09 per unit of volatility. If you would invest  596.00  in Shaheen Insurance on December 4, 2024 and sell it today you would earn a total of  85.00  from holding Shaheen Insurance or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

Thatta Cement  vs.  Shaheen Insurance

Thatta Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thatta Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Thatta Cement is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Shaheen Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 6 (%) 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.

Pair Trading with Thatta Cement and Shaheen Insurance

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

The idea behind Thatta Cement and Shaheen Insurance 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.