Correlation Between East West and Pakistan Tobacco
Can any of the company-specific risk be diversified away by investing in both East West and Pakistan Tobacco 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 East West and Pakistan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Insurance and Pakistan Tobacco, you can compare the effects of market volatilities on East West and Pakistan Tobacco 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 East West with a short position of Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Pakistan Tobacco.
Diversification Opportunities for East West and Pakistan Tobacco
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between East and Pakistan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco and East West 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 East West Insurance are associated (or correlated) with Pakistan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Tobacco has no effect on the direction of East West i.e., East West and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between East West and Pakistan Tobacco
If you would invest 5,729 in East West Insurance on November 8, 2024 and sell it today you would earn a total of 0.00 from holding East West Insurance or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 27.27% |
| Values | Daily Returns |
East West Insurance vs. Pakistan Tobacco
Performance |
| Timeline |
| East West Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Pakistan Tobacco |
East West and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Pakistan Tobacco
The main advantage of trading using opposite East West and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Pakistan Tobacco 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 Tobacco will offset losses from the drop in Pakistan Tobacco's long position.| East West vs. JS Bank | East West vs. National Bank of | East West vs. IGI Life Insurance | East West vs. Soneri Bank |
| Pakistan Tobacco vs. Atlas Insurance | Pakistan Tobacco vs. Wah Nobel Chemicals | Pakistan Tobacco vs. Pakistan Reinsurance | Pakistan Tobacco vs. Synthetic Products Enterprises |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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