Correlation Between Bank of Punjab and Organic Meat
Can any of the company-specific risk be diversified away by investing in both Bank of Punjab and Organic Meat 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 Organic Meat 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 The Organic Meat, you can compare the effects of market volatilities on Bank of Punjab and Organic Meat 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 Organic Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Punjab and Organic Meat.
Diversification Opportunities for Bank of Punjab and Organic Meat
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Organic is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Punjab and The Organic Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Meat 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 Organic Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Meat has no effect on the direction of Bank of Punjab i.e., Bank of Punjab and Organic Meat go up and down completely randomly.
Pair Corralation between Bank of Punjab and Organic Meat
Assuming the 90 days trading horizon Bank of Punjab is expected to generate 1.98 times more return on investment than Organic Meat. However, Bank of Punjab is 1.98 times more volatile than The Organic Meat. It trades about 0.41 of its potential returns per unit of risk. The Organic Meat is currently generating about -0.25 per unit of risk. If you would invest 553.00 in Bank of Punjab on August 30, 2024 and sell it today you would earn a total of 232.00 from holding Bank of Punjab or generate 41.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Punjab vs. The Organic Meat
Performance |
| Timeline |
| Bank of Punjab |
| Organic Meat |
Bank of Punjab and Organic Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Punjab and Organic Meat
The main advantage of trading using opposite Bank of Punjab and Organic Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Punjab position performs unexpectedly, Organic Meat 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 Organic Meat will offset losses from the drop in Organic Meat's long position.| Bank of Punjab vs. Masood Textile Mills | Bank of Punjab vs. Fauji Foods | Bank of Punjab vs. KSB Pumps | Bank of Punjab vs. Mari Petroleum |
| Organic Meat vs. Bank of Punjab | Organic Meat vs. Wah Nobel Chemicals | Organic Meat vs. EFU General Insurance | Organic Meat vs. Silkbank |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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