Correlation Between JS Investments and Pakistan Tobacco
Can any of the company-specific risk be diversified away by investing in both JS Investments and Pakistan Tobacco 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 JS Investments and Pakistan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Pakistan Tobacco, you can compare the effects of market volatilities on JS Investments 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 JS Investments with a short position of Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Pakistan Tobacco.
Diversification Opportunities for JS Investments and Pakistan Tobacco
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JSIL and Pakistan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco and JS Investments 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 JS Investments 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 JS Investments i.e., JS Investments and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between JS Investments and Pakistan Tobacco
Assuming the 90 days trading horizon JS Investments is expected to under-perform the Pakistan Tobacco. In addition to that, JS Investments is 2.26 times more volatile than Pakistan Tobacco. It trades about -0.01 of its total potential returns per unit of risk. Pakistan Tobacco is currently generating about 0.17 per unit of volatility. If you would invest 117,516 in Pakistan Tobacco on August 25, 2024 and sell it today you would earn a total of 6,332 from holding Pakistan Tobacco or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. Pakistan Tobacco
Performance |
| Timeline |
| JS Investments |
| Pakistan Tobacco |
JS Investments and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Pakistan Tobacco
The main advantage of trading using opposite JS Investments and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments 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.| JS Investments vs. Amreli Steels | JS Investments vs. Dost Steels | JS Investments vs. Unilever Pakistan Foods | JS Investments vs. Shifa International Hospitals |
| Pakistan Tobacco vs. Roshan Packages | Pakistan Tobacco vs. Packages | Pakistan Tobacco vs. Nimir Industrial Chemical | Pakistan Tobacco vs. United 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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