Correlation Between Thatta Cement and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and KSB Pumps 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 KSB Pumps into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and KSB Pumps, you can compare the effects of market volatilities on Thatta Cement and KSB Pumps 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 KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and KSB Pumps.
Diversification Opportunities for Thatta Cement and KSB Pumps
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thatta and KSB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps 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 KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of Thatta Cement i.e., Thatta Cement and KSB Pumps go up and down completely randomly.
Pair Corralation between Thatta Cement and KSB Pumps
Assuming the 90 days trading horizon Thatta Cement is expected to generate 0.72 times more return on investment than KSB Pumps. However, Thatta Cement is 1.39 times less risky than KSB Pumps. It trades about 0.12 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.03 per unit of risk. If you would invest 1,492 in Thatta Cement on June 21, 2024 and sell it today you would earn a total of 3,720 from holding Thatta Cement or generate 249.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.34% |
Values | Daily Returns |
Thatta Cement vs. KSB Pumps
Performance |
Timeline |
Thatta Cement |
KSB Pumps |
Thatta Cement and KSB Pumps Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thatta Cement and KSB Pumps
The main advantage of trading using opposite Thatta Cement and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.Thatta Cement vs. Habib Bank | Thatta Cement vs. National Bank of | Thatta Cement vs. United Bank | Thatta Cement vs. MCB Bank |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |