Correlation Between Industrial Investment and Punjab National
Can any of the company-specific risk be diversified away by investing in both Industrial Investment and Punjab National 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 Industrial Investment and Punjab National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Investment Trust and Punjab National Bank, you can compare the effects of market volatilities on Industrial Investment and Punjab National 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 Industrial Investment with a short position of Punjab National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Punjab National.
Diversification Opportunities for Industrial Investment and Punjab National
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Industrial and Punjab is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Punjab National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab National Bank and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Punjab National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab National Bank has no effect on the direction of Industrial Investment i.e., Industrial Investment and Punjab National go up and down completely randomly.
Pair Corralation between Industrial Investment and Punjab National
Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 1.05 times more return on investment than Punjab National. However, Industrial Investment is 1.05 times more volatile than Punjab National Bank. It trades about 0.33 of its potential returns per unit of risk. Punjab National Bank is currently generating about 0.13 per unit of risk. If you would invest 32,435 in Industrial Investment Trust on August 27, 2024 and sell it today you would earn a total of 5,610 from holding Industrial Investment Trust or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Industrial Investment Trust vs. Punjab National Bank
Performance |
| Timeline |
| Industrial Investment |
| Punjab National Bank |
Industrial Investment and Punjab National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Investment and Punjab National
The main advantage of trading using opposite Industrial Investment and Punjab National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment position performs unexpectedly, Punjab National 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 Punjab National will offset losses from the drop in Punjab National's long position.| Industrial Investment vs. Reliance Industries Limited | Industrial Investment vs. Life Insurance | Industrial Investment vs. Indian Oil | Industrial Investment vs. Oil Natural Gas |
| Punjab National vs. MRF Limited | Punjab National vs. JSW Holdings Limited | Punjab National vs. Maharashtra Scooters Limited | Punjab National vs. Nalwa Sons Investments |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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