Correlation Between United Bank and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both United Bank and Gul Ahmed 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 United Bank and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bank and Gul Ahmed Textile, you can compare the effects of market volatilities on United Bank and Gul Ahmed 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 United Bank with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Gul Ahmed.
Diversification Opportunities for United Bank and Gul Ahmed
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Gul is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Bank and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and United Bank 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 United Bank are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of United Bank i.e., United Bank and Gul Ahmed go up and down completely randomly.
Pair Corralation between United Bank and Gul Ahmed
Assuming the 90 days trading horizon United Bank is expected to generate 0.78 times more return on investment than Gul Ahmed. However, United Bank is 1.29 times less risky than Gul Ahmed. It trades about 0.11 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about -0.02 per unit of risk. If you would invest 36,801 in United Bank on December 29, 2024 and sell it today you would earn a total of 4,288 from holding United Bank or generate 11.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Bank vs. Gul Ahmed Textile
Performance |
Timeline |
United Bank |
Gul Ahmed Textile |
United Bank and Gul Ahmed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Bank and Gul Ahmed
The main advantage of trading using opposite United Bank and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.United Bank vs. Bank of Punjab | United Bank vs. United Insurance | United Bank vs. Pakistan Reinsurance | United Bank vs. EFU General Insurance |
Gul Ahmed vs. Roshan Packages | Gul Ahmed vs. Big Bird Foods | Gul Ahmed vs. National Foods | Gul Ahmed vs. Fauji Foods |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |