Correlation Between Bank of Punjab and East West
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and East West 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 Bank of Punjab and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Punjab and East West Insurance, you can compare the effects of market volatilities on Bank of Punjab and East West 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 Bank of Punjab with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and East West.
Diversification Opportunities for Bank of Punjab and East West
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and East is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Insurance and Bank of Punjab 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 Bank of Punjab are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Insurance has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and East West go up and down completely randomly.
Pair Corralation between Bank of Punjab and East West
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 0.94 times more return on investment than East West. However, Bank of Punjab is 1.07 times less risky than East West. It trades about 0.08 of its potential returns per unit of risk. East West Insurance is currently generating about -0.14 per unit of risk. If you would invest 332.00 in Bank of Punjab on August 24, 2024 and sell it today you would earn a total of 343.00 from holding Bank of Punjab or generate 103.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.47% |
| Values | Daily Returns |
Bank of Punjab vs. East West Insurance
Performance |
| Timeline |
| Bank of Punjab |
| East West Insurance |
Bank of Punjab and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and East West
The main advantage of trading using opposite Bank of Punjab and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Bank of Punjab vs. Habib Bank | Bank of Punjab vs. National Bank of | Bank of Punjab vs. MCB Bank | Bank of Punjab vs. Allied Bank |
| East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Century Insurance | East West vs. Reliance Weaving Mills |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |