Correlation Between KOT Addu and Nestle Pakistan
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By analyzing existing cross correlation between KOT Addu Power and Nestle Pakistan, you can compare the effects of market volatilities on KOT Addu and Nestle Pakistan 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 KOT Addu with a short position of Nestle Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOT Addu and Nestle Pakistan.
Diversification Opportunities for KOT Addu and Nestle Pakistan
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KOT and Nestle is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KOT Addu Power and Nestle Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle Pakistan and KOT Addu 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 KOT Addu Power are associated (or correlated) with Nestle Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle Pakistan has no effect on the direction of KOT Addu i.e., KOT Addu and Nestle Pakistan go up and down completely randomly.
Pair Corralation between KOT Addu and Nestle Pakistan
Assuming the 90 days trading horizon KOT Addu Power is expected to generate 3.91 times more return on investment than Nestle Pakistan. However, KOT Addu is 3.91 times more volatile than Nestle Pakistan. It trades about 0.38 of its potential returns per unit of risk. Nestle Pakistan is currently generating about -0.04 per unit of risk. If you would invest 2,760 in KOT Addu Power on August 31, 2024 and sell it today you would earn a total of 670.00 from holding KOT Addu Power or generate 24.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KOT Addu Power vs. Nestle Pakistan
Performance |
| Timeline |
| KOT Addu Power |
| Nestle Pakistan |
KOT Addu and Nestle Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOT Addu and Nestle Pakistan
The main advantage of trading using opposite KOT Addu and Nestle Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOT Addu position performs unexpectedly, Nestle Pakistan 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 Nestle Pakistan will offset losses from the drop in Nestle Pakistan's long position.| KOT Addu vs. Pakistan Tobacco | KOT Addu vs. Unilever Pakistan Foods | KOT Addu vs. Atlas Insurance | KOT Addu vs. East West Insurance |
| Nestle Pakistan vs. Quice Food Industries | Nestle Pakistan vs. Agha Steel Industries | Nestle Pakistan vs. National Foods | Nestle Pakistan vs. Pakistan Aluminium Beverage |
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 Stocks Directory module to find actively traded stocks across global markets.
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