Correlation Between Bank of Punjab and Quice Food
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and Quice Food 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 Quice Food 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 Quice Food Industries, you can compare the effects of market volatilities on Bank of Punjab and Quice Food 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 Quice Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and Quice Food.
Diversification Opportunities for Bank of Punjab and Quice Food
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Quice is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and Quice Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quice Food Industries 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 Quice Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quice Food Industries has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and Quice Food go up and down completely randomly.
Pair Corralation between Bank of Punjab and Quice Food
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 2.88 times more return on investment than Quice Food. However, Bank of Punjab is 2.88 times more volatile than Quice Food Industries. It trades about 0.28 of its potential returns per unit of risk. Quice Food Industries is currently generating about 0.33 per unit of risk. If you would invest 987.00 in Bank of Punjab on November 28, 2024 and sell it today you would earn a total of 272.00 from holding Bank of Punjab or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Punjab vs. Quice Food Industries
Performance |
| Timeline |
| Bank of Punjab |
| Quice Food Industries |
Bank of Punjab and Quice Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and Quice Food
The main advantage of trading using opposite Bank of Punjab and Quice Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, Quice Food 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 Quice Food will offset losses from the drop in Quice Food's long position.| Bank of Punjab vs. Matco Foods | Bank of Punjab vs. Grays Leasing | Bank of Punjab vs. National Foods | Bank of Punjab vs. Orient Rental Modaraba |
| Quice Food vs. Roshan Packages | Quice Food vs. Avanceon | Quice Food vs. Synthetic Products Enterprises | Quice Food vs. Engro Polymer 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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