Correlation Between Big Bird and Pakistan Tobacco
Can any of the company-specific risk be diversified away by investing in both Big Bird and Pakistan Tobacco 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 Big Bird and Pakistan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and Pakistan Tobacco, you can compare the effects of market volatilities on Big Bird and Pakistan Tobacco 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 Big Bird with a short position of Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Pakistan Tobacco.
Diversification Opportunities for Big Bird and Pakistan Tobacco
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Pakistan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco and Big Bird 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 Big Bird Foods are associated (or correlated) with Pakistan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Tobacco has no effect on the direction of Big Bird i.e., Big Bird and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between Big Bird and Pakistan Tobacco
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the Pakistan Tobacco. In addition to that, Big Bird is 2.1 times more volatile than Pakistan Tobacco. It trades about -0.26 of its total potential returns per unit of risk. Pakistan Tobacco is currently generating about -0.07 per unit of volatility. If you would invest 127,200 in Pakistan Tobacco on September 2, 2024 and sell it today you would lose (3,681) from holding Pakistan Tobacco or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Bird Foods vs. Pakistan Tobacco
Performance |
| Timeline |
| Big Bird Foods |
| Pakistan Tobacco |
Big Bird and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Pakistan Tobacco
The main advantage of trading using opposite Big Bird and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Pakistan Tobacco 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 Tobacco will offset losses from the drop in Pakistan Tobacco's long position.| Big Bird vs. Security Investment Bank | Big Bird vs. Meezan Bank | Big Bird vs. ITTEFAQ Iron Industries | Big Bird vs. Reliance Insurance Co |
| Pakistan Tobacco vs. Al Ghazi Tractors | Pakistan Tobacco vs. Shell Pakistan | Pakistan Tobacco vs. Pakistan State Oil | Pakistan Tobacco vs. Millat Tractors |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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