Correlation Between IBL HealthCare and Pak Gulf
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and Pak Gulf 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 IBL HealthCare and Pak Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Pak Gulf Leasing, you can compare the effects of market volatilities on IBL HealthCare and Pak Gulf 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 IBL HealthCare with a short position of Pak Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Pak Gulf.
Diversification Opportunities for IBL HealthCare and Pak Gulf
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBL and Pak is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Pak Gulf Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Gulf Leasing and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with Pak Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Gulf Leasing has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Pak Gulf go up and down completely randomly.
Pair Corralation between IBL HealthCare and Pak Gulf
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 0.77 times more return on investment than Pak Gulf. However, IBL HealthCare is 1.3 times less risky than Pak Gulf. It trades about 0.33 of its potential returns per unit of risk. Pak Gulf Leasing is currently generating about 0.17 per unit of risk. If you would invest 2,995 in IBL HealthCare on August 27, 2024 and sell it today you would earn a total of 954.00 from holding IBL HealthCare or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBL HealthCare vs. Pak Gulf Leasing
Performance |
| Timeline |
| IBL HealthCare |
| Pak Gulf Leasing |
IBL HealthCare and Pak Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Pak Gulf
The main advantage of trading using opposite IBL HealthCare and Pak Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, Pak Gulf 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 Pak Gulf will offset losses from the drop in Pak Gulf's long position.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
| Pak Gulf vs. Masood Textile Mills | Pak Gulf vs. Fauji Foods | Pak Gulf vs. KSB Pumps | Pak Gulf vs. Mari Petroleum |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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