Correlation Between Hi Tech and Pakistan Oilfields
Can any of the company-specific risk be diversified away by investing in both Hi Tech and Pakistan Oilfields 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 Hi Tech and Pakistan Oilfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and Pakistan Oilfields, you can compare the effects of market volatilities on Hi Tech and Pakistan Oilfields 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 Hi Tech with a short position of Pakistan Oilfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Pakistan Oilfields.
Diversification Opportunities for Hi Tech and Pakistan Oilfields
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between HTL and Pakistan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and Pakistan Oilfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Oilfields and Hi Tech 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 Hi Tech Lubricants are associated (or correlated) with Pakistan Oilfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Oilfields has no effect on the direction of Hi Tech i.e., Hi Tech and Pakistan Oilfields go up and down completely randomly.
Pair Corralation between Hi Tech and Pakistan Oilfields
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to generate 2.0 times more return on investment than Pakistan Oilfields. However, Hi Tech is 2.0 times more volatile than Pakistan Oilfields. It trades about 0.23 of its potential returns per unit of risk. Pakistan Oilfields is currently generating about 0.03 per unit of risk. If you would invest 3,487 in Hi Tech Lubricants on September 3, 2024 and sell it today you would earn a total of 1,174 from holding Hi Tech Lubricants or generate 33.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. Pakistan Oilfields
Performance |
| Timeline |
| Hi Tech Lubricants |
| Pakistan Oilfields |
Hi Tech and Pakistan Oilfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and Pakistan Oilfields
The main advantage of trading using opposite Hi Tech and Pakistan Oilfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, Pakistan Oilfields 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 Oilfields will offset losses from the drop in Pakistan Oilfields' long position.| Hi Tech vs. Masood Textile Mills | Hi Tech vs. Fauji Foods | Hi Tech vs. KSB Pumps | Hi Tech vs. Mari Petroleum |
| Pakistan Oilfields vs. WorldCall Telecom | Pakistan Oilfields vs. Pak Datacom | Pakistan Oilfields vs. Pak Gulf Leasing | Pakistan Oilfields vs. Hi Tech Lubricants |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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