Correlation Between Hub Power and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Hub Power and Pakistan Telecommunicatio 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 Telecommunicatio 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 Telecommunication, you can compare the effects of market volatilities on Hub Power and Pakistan Telecommunicatio 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 Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub Power and Pakistan Telecommunicatio.
Diversification Opportunities for Hub Power and Pakistan Telecommunicatio
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hub and Pakistan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio 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 Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Hub Power i.e., Hub Power and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Hub Power and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Hub Power is expected to generate 58.08 times less return on investment than Pakistan Telecommunicatio. But when comparing it to its historical volatility, Hub Power is 1.42 times less risky than Pakistan Telecommunicatio. It trades about 0.0 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,178 in Pakistan Telecommunication on November 3, 2024 and sell it today you would earn a total of 1,253 from holding Pakistan Telecommunication or generate 106.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Power vs. Pakistan Telecommunication
Performance |
| Timeline |
| Hub Power |
| Pakistan Telecommunicatio |
Hub Power and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub Power and Pakistan Telecommunicatio
The main advantage of trading using opposite Hub Power and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Power position performs unexpectedly, Pakistan Telecommunicatio 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 Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| Hub Power vs. Pakistan Reinsurance | Hub Power vs. Atlas Insurance | Hub Power vs. Allied Bank | Hub Power vs. Bank of Punjab |
| Pakistan Telecommunicatio vs. Apna Microfinance Bank | Pakistan Telecommunicatio vs. Fauji Foods | Pakistan Telecommunicatio vs. East West Insurance | Pakistan Telecommunicatio vs. Unilever Pakistan Foods |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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