Correlation Between Fateh Sports and Pakistan Engineering
Can any of the company-specific risk be diversified away by investing in both Fateh Sports and Pakistan Engineering 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 Fateh Sports and Pakistan Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fateh Sports Wear and Pakistan Engineering, you can compare the effects of market volatilities on Fateh Sports and Pakistan Engineering 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 Fateh Sports with a short position of Pakistan Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fateh Sports and Pakistan Engineering.
Diversification Opportunities for Fateh Sports and Pakistan Engineering
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fateh and Pakistan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fateh Sports Wear and Pakistan Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Engineering and Fateh Sports 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 Fateh Sports Wear are associated (or correlated) with Pakistan Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Engineering has no effect on the direction of Fateh Sports i.e., Fateh Sports and Pakistan Engineering go up and down completely randomly.
Pair Corralation between Fateh Sports and Pakistan Engineering
Assuming the 90 days trading horizon Fateh Sports Wear is expected to under-perform the Pakistan Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Fateh Sports Wear is 1.11 times less risky than Pakistan Engineering. The stock trades about -0.41 of its potential returns per unit of risk. The Pakistan Engineering is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 87,004 in Pakistan Engineering on October 24, 2024 and sell it today you would lose (25,984) from holding Pakistan Engineering or give up 29.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 39.34% |
| Values | Daily Returns |
Fateh Sports Wear vs. Pakistan Engineering
Performance |
| Timeline |
| Fateh Sports Wear |
| Pakistan Engineering |
Fateh Sports and Pakistan Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fateh Sports and Pakistan Engineering
The main advantage of trading using opposite Fateh Sports and Pakistan Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fateh Sports position performs unexpectedly, Pakistan Engineering 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 Engineering will offset losses from the drop in Pakistan Engineering's long position.| Fateh Sports vs. Habib Insurance | Fateh Sports vs. Ghandhara Automobile | Fateh Sports vs. Century Insurance | Fateh Sports vs. Reliance Weaving Mills |
| Pakistan Engineering vs. Hi Tech Lubricants | Pakistan Engineering vs. Sardar Chemical Industries | Pakistan Engineering vs. WorldCall Telecom | Pakistan Engineering 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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