Correlation Between Bawany Air and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Bawany Air and Bank of Punjab 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 Bawany Air and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bawany Air Products and Bank of Punjab, you can compare the effects of market volatilities on Bawany Air and Bank of Punjab 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 Bawany Air with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bawany Air and Bank of Punjab.
Diversification Opportunities for Bawany Air and Bank of Punjab
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bawany and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bawany Air Products and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and Bawany Air 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 Bawany Air Products are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Bawany Air i.e., Bawany Air and Bank of Punjab go up and down completely randomly.
Pair Corralation between Bawany Air and Bank of Punjab
Assuming the 90 days trading horizon Bawany Air Products is expected to generate 2.07 times more return on investment than Bank of Punjab. However, Bawany Air is 2.07 times more volatile than Bank of Punjab. It trades about 0.11 of its potential returns per unit of risk. Bank of Punjab is currently generating about 0.12 per unit of risk. If you would invest 981.00 in Bawany Air Products on November 5, 2024 and sell it today you would earn a total of 1,920 from holding Bawany Air Products or generate 195.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.93% |
| Values | Daily Returns |
Bawany Air Products vs. Bank of Punjab
Performance |
| Timeline |
| Bawany Air Products |
| Bank of Punjab |
Bawany Air and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bawany Air and Bank of Punjab
The main advantage of trading using opposite Bawany Air and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bawany Air position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.| Bawany Air vs. Pakistan Telecommunication | Bawany Air vs. Unity Foods | Bawany Air vs. Engro Polymer Chemicals | Bawany Air vs. Wah Nobel Chemicals |
| Bank of Punjab vs. Pakistan Synthetics | Bank of Punjab vs. Quice Food Industries | Bank of Punjab vs. IBL HealthCare | Bank of Punjab vs. Wah Nobel Chemicals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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