Correlation Between Hub Power and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Hub Power and Pakistan State 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 Hub Power and Pakistan State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Power and Pakistan State Oil, you can compare the effects of market volatilities on Hub Power and Pakistan State 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 Hub Power with a short position of Pakistan State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub Power and Pakistan State.
Diversification Opportunities for Hub Power and Pakistan State
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hub and Pakistan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil and Hub Power 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 Hub Power are associated (or correlated) with Pakistan State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Hub Power i.e., Hub Power and Pakistan State go up and down completely randomly.
Pair Corralation between Hub Power and Pakistan State
Assuming the 90 days trading horizon Hub Power is expected to generate 0.81 times more return on investment than Pakistan State. However, Hub Power is 1.24 times less risky than Pakistan State. It trades about -0.01 of its potential returns per unit of risk. Pakistan State Oil is currently generating about -0.23 per unit of risk. If you would invest 13,139 in Hub Power on November 5, 2024 and sell it today you would lose (101.00) from holding Hub Power or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Power vs. Pakistan State Oil
Performance |
| Timeline |
| Hub Power |
| Pakistan State Oil |
Hub Power and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub Power and Pakistan State
The main advantage of trading using opposite Hub Power and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Power position performs unexpectedly, Pakistan State 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 State will offset losses from the drop in Pakistan State's long position.| Hub Power vs. Jubilee Life Insurance | Hub Power vs. Shaheen Insurance | Hub Power vs. Premier Insurance | Hub Power vs. TPL Insurance |
| Pakistan State vs. Adamjee Insurance | Pakistan State vs. Universal Insurance | Pakistan State vs. AKD Hospitality | Pakistan State vs. EFU General Insurance |
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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