Correlation Between Attock Petroleum and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Attock Petroleum 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 Attock Petroleum and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Attock Petroleum and Pakistan Telecommunication, you can compare the effects of market volatilities on Attock Petroleum 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 Attock Petroleum with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Attock Petroleum and Pakistan Telecommunicatio.
Diversification Opportunities for Attock Petroleum and Pakistan Telecommunicatio
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Attock and Pakistan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Attock Petroleum and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and Attock Petroleum 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 Attock Petroleum 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 Attock Petroleum i.e., Attock Petroleum and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Attock Petroleum and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Attock Petroleum is expected to generate 0.64 times more return on investment than Pakistan Telecommunicatio. However, Attock Petroleum is 1.56 times less risky than Pakistan Telecommunicatio. It trades about -0.19 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about -0.27 per unit of risk. If you would invest 54,078 in Attock Petroleum on October 22, 2024 and sell it today you would lose (2,828) from holding Attock Petroleum or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Attock Petroleum vs. Pakistan Telecommunication
Performance |
| Timeline |
| Attock Petroleum |
| Pakistan Telecommunicatio |
Attock Petroleum and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Attock Petroleum and Pakistan Telecommunicatio
The main advantage of trading using opposite Attock Petroleum and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Attock Petroleum 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.| Attock Petroleum vs. Air Link Communication | Attock Petroleum vs. Habib Insurance | Attock Petroleum vs. Hi Tech Lubricants | Attock Petroleum vs. Adamjee Insurance |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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