Correlation Between Askari Bank and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Askari Bank and Pakistan Telecommunicatio 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 Askari Bank and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari Bank and Pakistan Telecommunication, you can compare the effects of market volatilities on Askari Bank and Pakistan Telecommunicatio 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 Askari Bank with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari Bank and Pakistan Telecommunicatio.
Diversification Opportunities for Askari Bank and Pakistan Telecommunicatio
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Askari and Pakistan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and Askari 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 Askari Bank are associated (or correlated) with Pakistan Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Askari Bank i.e., Askari Bank and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Askari Bank and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Askari Bank is expected to generate 0.99 times more return on investment than Pakistan Telecommunicatio. However, Askari Bank is 1.01 times less risky than Pakistan Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about -0.03 per unit of risk. If you would invest 4,310 in Askari Bank on November 7, 2024 and sell it today you would earn a total of 53.00 from holding Askari Bank or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari Bank vs. Pakistan Telecommunication
Performance |
| Timeline |
| Askari Bank |
| Pakistan Telecommunicatio |
Askari Bank and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari Bank and Pakistan Telecommunicatio
The main advantage of trading using opposite Askari Bank and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank position performs unexpectedly, Pakistan Telecommunicatio 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 Pakistan Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| Askari Bank vs. Askari General Insurance | Askari Bank vs. Roshan Packages | Askari Bank vs. Unilever Pakistan Foods | Askari Bank vs. Dost Steels |
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 CEOs Directory module to screen CEOs from public companies around the world.
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