Correlation Between Bank of Punjab and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and ORIX Leasing 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 ORIX Leasing 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 ORIX Leasing Pakistan, you can compare the effects of market volatilities on Bank of Punjab and ORIX Leasing 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 ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and ORIX Leasing.
Diversification Opportunities for Bank of Punjab and ORIX Leasing
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and ORIX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan 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 ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and ORIX Leasing go up and down completely randomly.
Pair Corralation between Bank of Punjab and ORIX Leasing
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 1.74 times more return on investment than ORIX Leasing. However, Bank of Punjab is 1.74 times more volatile than ORIX Leasing Pakistan. It trades about 0.17 of its potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.14 per unit of risk. If you would invest 502.00 in Bank of Punjab on October 13, 2024 and sell it today you would earn a total of 507.00 from holding Bank of Punjab or generate 101.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.29% |
| Values | Daily Returns |
Bank of Punjab vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| Bank of Punjab |
| ORIX Leasing Pakistan |
Bank of Punjab and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and ORIX Leasing
The main advantage of trading using opposite Bank of Punjab and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.| Bank of Punjab vs. Aisha Steel Mills | Bank of Punjab vs. Lotte Chemical Pakistan | Bank of Punjab vs. Wah Nobel Chemicals | Bank of Punjab vs. Unity Foods |
| ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. Universal Insurance | ORIX Leasing vs. JS Global Banking | ORIX Leasing vs. NetSol Technologies |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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