Correlation Between Bank of Punjab and Sitara Chemical
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and Sitara Chemical 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 Sitara Chemical 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 Sitara Chemical Industries, you can compare the effects of market volatilities on Bank of Punjab and Sitara Chemical 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 Sitara Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and Sitara Chemical.
Diversification Opportunities for Bank of Punjab and Sitara Chemical
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Sitara is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and Sitara Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitara Chemical Indu 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 Sitara Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitara Chemical Indu has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and Sitara Chemical go up and down completely randomly.
Pair Corralation between Bank of Punjab and Sitara Chemical
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 2.03 times more return on investment than Sitara Chemical. However, Bank of Punjab is 2.03 times more volatile than Sitara Chemical Industries. It trades about 0.48 of its potential returns per unit of risk. Sitara Chemical Industries is currently generating about 0.13 per unit of risk. If you would invest 582.00 in Bank of Punjab on September 1, 2024 and sell it today you would earn a total of 338.00 from holding Bank of Punjab or generate 58.08% 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. Sitara Chemical Industries
Performance |
| Timeline |
| Bank of Punjab |
| Sitara Chemical Indu |
Bank of Punjab and Sitara Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and Sitara Chemical
The main advantage of trading using opposite Bank of Punjab and Sitara Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, Sitara Chemical 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 Sitara Chemical will offset losses from the drop in Sitara Chemical's long position.| Bank of Punjab vs. United Insurance | Bank of Punjab vs. Air Link Communication | Bank of Punjab vs. Ghandhara Automobile | Bank of Punjab vs. Big Bird Foods |
| Sitara Chemical vs. Avanceon | Sitara Chemical vs. Shaheen Insurance | Sitara Chemical vs. Bank of Punjab | Sitara Chemical vs. Ghani Chemical Industries |
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 CEOs Directory module to screen CEOs from public companies around the world.
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