Correlation Between Ghani Chemical and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and Bank of Punjab 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 Ghani Chemical and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghani Chemical Industries and Bank of Punjab, you can compare the effects of market volatilities on Ghani Chemical and Bank of Punjab 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 Ghani Chemical with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and Bank of Punjab.
Diversification Opportunities for Ghani Chemical and Bank of Punjab
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ghani and Bank is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and Ghani Chemical 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 Ghani Chemical Industries are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and Bank of Punjab go up and down completely randomly.
Pair Corralation between Ghani Chemical and Bank of Punjab
Assuming the 90 days trading horizon Ghani Chemical Industries is expected to generate 1.48 times more return on investment than Bank of Punjab. However, Ghani Chemical is 1.48 times more volatile than Bank of Punjab. It trades about 0.28 of its potential returns per unit of risk. Bank of Punjab is currently generating about 0.3 per unit of risk. If you would invest 1,107 in Ghani Chemical Industries on August 25, 2024 and sell it today you would earn a total of 316.00 from holding Ghani Chemical Industries or generate 28.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ghani Chemical Industries vs. Bank of Punjab
Performance |
| Timeline |
| Ghani Chemical Industries |
| Bank of Punjab |
Ghani Chemical and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and Bank of Punjab
The main advantage of trading using opposite Ghani Chemical and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.| Ghani Chemical vs. MCB Investment Manag | Ghani Chemical vs. Air Link Communication | Ghani Chemical vs. Pak Gulf Leasing | Ghani Chemical vs. Synthetic Products Enterprises |
| Bank of Punjab vs. Pakistan Aluminium Beverage | Bank of Punjab vs. Murree Brewery | Bank of Punjab vs. Pak Gulf Leasing | Bank of Punjab vs. Packages |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |