Correlation Between EFU General and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both EFU General and Pakistan Telecommunicatio 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 EFU General and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFU General Insurance and Pakistan Telecommunication, you can compare the effects of market volatilities on EFU General and Pakistan Telecommunicatio 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 EFU General with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Pakistan Telecommunicatio.
Diversification Opportunities for EFU General and Pakistan Telecommunicatio
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EFU and Pakistan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and EFU General 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 EFU General Insurance are associated (or correlated) with Pakistan Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of EFU General i.e., EFU General and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between EFU General and Pakistan Telecommunicatio
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 1.5 times more return on investment than Pakistan Telecommunicatio. However, EFU General is 1.5 times more volatile than Pakistan Telecommunication. It trades about 0.0 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about -0.26 per unit of risk. If you would invest 11,919 in EFU General Insurance on October 31, 2024 and sell it today you would lose (157.00) from holding EFU General Insurance or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFU General Insurance vs. Pakistan Telecommunication
Performance |
| Timeline |
| EFU General Insurance |
| Pakistan Telecommunicatio |
EFU General and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Pakistan Telecommunicatio
The main advantage of trading using opposite EFU General and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Pakistan Telecommunicatio 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 Pakistan Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| EFU General vs. Hi Tech Lubricants | EFU General vs. Sindh Modaraba Management | EFU General vs. Reliance Insurance Co | EFU General vs. Grays Leasing |
| Pakistan Telecommunicatio vs. NetSol Technologies | Pakistan Telecommunicatio vs. Atlas Insurance | Pakistan Telecommunicatio vs. Nimir Industrial Chemical | Pakistan Telecommunicatio vs. The Organic Meat |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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