Correlation Between ITTEFAQ Iron and Pakistan Tobacco
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By analyzing existing cross correlation between ITTEFAQ Iron Industries and Pakistan Tobacco, you can compare the effects of market volatilities on ITTEFAQ Iron and Pakistan Tobacco 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 ITTEFAQ Iron with a short position of Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITTEFAQ Iron and Pakistan Tobacco.
Diversification Opportunities for ITTEFAQ Iron and Pakistan Tobacco
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITTEFAQ and Pakistan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ITTEFAQ Iron Industries and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco and ITTEFAQ Iron 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 ITTEFAQ Iron Industries are associated (or correlated) with Pakistan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Tobacco has no effect on the direction of ITTEFAQ Iron i.e., ITTEFAQ Iron and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between ITTEFAQ Iron and Pakistan Tobacco
Assuming the 90 days trading horizon ITTEFAQ Iron is expected to generate 2.54 times less return on investment than Pakistan Tobacco. But when comparing it to its historical volatility, ITTEFAQ Iron Industries is 1.01 times less risky than Pakistan Tobacco. It trades about 0.02 of its potential returns per unit of risk. Pakistan Tobacco is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 81,513 in Pakistan Tobacco on August 30, 2024 and sell it today you would earn a total of 38,495 from holding Pakistan Tobacco or generate 47.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.71% |
| Values | Daily Returns |
ITTEFAQ Iron Industries vs. Pakistan Tobacco
Performance |
| Timeline |
| ITTEFAQ Iron Industries |
| Pakistan Tobacco |
ITTEFAQ Iron and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITTEFAQ Iron and Pakistan Tobacco
The main advantage of trading using opposite ITTEFAQ Iron and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITTEFAQ Iron position performs unexpectedly, Pakistan Tobacco 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 Tobacco will offset losses from the drop in Pakistan Tobacco's long position.| ITTEFAQ Iron vs. Oil and Gas | ITTEFAQ Iron vs. Pakistan State Oil | ITTEFAQ Iron vs. Pakistan Petroleum | ITTEFAQ Iron vs. Fauji Fertilizer |
| Pakistan Tobacco vs. Masood Textile Mills | Pakistan Tobacco vs. Fauji Foods | Pakistan Tobacco vs. KSB Pumps | Pakistan Tobacco 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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