Correlation Between Astar and Pakistan Reinsurance
Can any of the company-specific risk be diversified away by investing in both Astar and Pakistan Reinsurance 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 Astar and Pakistan Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Pakistan Reinsurance, you can compare the effects of market volatilities on Astar and Pakistan Reinsurance 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 Astar with a short position of Pakistan Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Pakistan Reinsurance.
Diversification Opportunities for Astar and Pakistan Reinsurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Astar and Pakistan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Pakistan Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Reinsurance and Astar 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 Astar are associated (or correlated) with Pakistan Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Reinsurance has no effect on the direction of Astar i.e., Astar and Pakistan Reinsurance go up and down completely randomly.
Pair Corralation between Astar and Pakistan Reinsurance
Assuming the 90 days trading horizon Astar is expected to generate 2.99 times more return on investment than Pakistan Reinsurance. However, Astar is 2.99 times more volatile than Pakistan Reinsurance. It trades about 0.04 of its potential returns per unit of risk. Pakistan Reinsurance is currently generating about 0.08 per unit of risk. If you would invest 4.75 in Astar on October 13, 2024 and sell it today you would earn a total of 1.43 from holding Astar or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.78% |
| Values | Daily Returns |
Astar vs. Pakistan Reinsurance
Performance |
| Timeline |
| Astar |
| Pakistan Reinsurance |
Astar and Pakistan Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Pakistan Reinsurance
The main advantage of trading using opposite Astar and Pakistan Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Pakistan Reinsurance 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 Reinsurance will offset losses from the drop in Pakistan Reinsurance's long position.The idea behind Astar and Pakistan Reinsurance 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.| Pakistan Reinsurance vs. Hi Tech Lubricants | Pakistan Reinsurance vs. Universal Insurance | Pakistan Reinsurance vs. Allied Bank | Pakistan Reinsurance vs. JS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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