Correlation Between Bank of Punjab and Honda Atlas
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and Honda Atlas 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 Honda Atlas 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 Honda Atlas Cars, you can compare the effects of market volatilities on Bank of Punjab and Honda Atlas 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 Honda Atlas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and Honda Atlas.
Diversification Opportunities for Bank of Punjab and Honda Atlas
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Honda is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and Honda Atlas Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Atlas Cars 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 Honda Atlas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Atlas Cars has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and Honda Atlas go up and down completely randomly.
Pair Corralation between Bank of Punjab and Honda Atlas
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 1.42 times more return on investment than Honda Atlas. However, Bank of Punjab is 1.42 times more volatile than Honda Atlas Cars. It trades about 0.11 of its potential returns per unit of risk. Honda Atlas Cars is currently generating about -0.03 per unit of risk. If you would invest 942.00 in Bank of Punjab on October 26, 2024 and sell it today you would earn a total of 53.00 from holding Bank of Punjab or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Punjab vs. Honda Atlas Cars
Performance |
| Timeline |
| Bank of Punjab |
| Honda Atlas Cars |
Bank of Punjab and Honda Atlas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and Honda Atlas
The main advantage of trading using opposite Bank of Punjab and Honda Atlas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, Honda Atlas 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 Honda Atlas will offset losses from the drop in Honda Atlas' long position.| Bank of Punjab vs. MCB Investment Manag | Bank of Punjab vs. Bawany Air Products | Bank of Punjab vs. Pakistan Reinsurance | Bank of Punjab vs. EFU General Insurance |
| Honda Atlas vs. Century Insurance | Honda Atlas vs. Pakistan Aluminium Beverage | Honda Atlas vs. Bank of Punjab | Honda Atlas vs. EFU General Insurance |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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