Correlation Between Nishat Mills and ITTEFAQ Iron

Can any of the company-specific risk be diversified away by investing in both Nishat Mills and ITTEFAQ Iron 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 Nishat Mills and ITTEFAQ Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nishat Mills and ITTEFAQ Iron Industries, you can compare the effects of market volatilities on Nishat Mills and ITTEFAQ Iron 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 Nishat Mills with a short position of ITTEFAQ Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishat Mills and ITTEFAQ Iron.

Diversification Opportunities for Nishat Mills and ITTEFAQ Iron

0.79

Correlation Coefficient

Nishat Mills  ITTEFAQ Iron

Poor diversification

The 3 months correlation between Nishat and ITTEFAQ is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nishat Mills and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and Nishat Mills 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 Nishat Mills are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of Nishat Mills i.e., Nishat Mills and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between Nishat Mills and ITTEFAQ Iron

Assuming the 90 days trading horizon Nishat Mills is expected to generate 1.24 times less return on investment than ITTEFAQ Iron. But when comparing it to its historical volatility, Nishat Mills is 1.39 times less risky than ITTEFAQ Iron. It trades about 0.05 of its potential returns per unit of risk. ITTEFAQ Iron Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  730.00  in ITTEFAQ Iron Industries on September 9, 2025 and sell it today you would earn a total of  175.00  from holding ITTEFAQ Iron Industries or generate 23.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Nishat Mills  vs.  ITTEFAQ Iron Industries

Nishat Mills

Risk-Adjusted Performance

Weakest

Over the last 90 days Nishat Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nishat Mills is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

Weakest

Over the last 90 days ITTEFAQ Iron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Nishat Mills and ITTEFAQ Iron

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

The idea behind Nishat Mills and ITTEFAQ Iron Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.