Correlation Between KOT Addu and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both KOT Addu and Roshan Packages 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 KOT Addu and Roshan Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KOT Addu Power and Roshan Packages, you can compare the effects of market volatilities on KOT Addu and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOT Addu and Roshan Packages.
Diversification Opportunities for KOT Addu and Roshan Packages
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KOT and Roshan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KOT Addu Power and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of KOT Addu i.e., KOT Addu and Roshan Packages go up and down completely randomly.
Pair Corralation between KOT Addu and Roshan Packages
Assuming the 90 days trading horizon KOT Addu Power is expected to generate 0.75 times more return on investment than Roshan Packages. However, KOT Addu Power is 1.33 times less risky than Roshan Packages. It trades about 0.38 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.15 per unit of risk. If you would invest 2,937 in KOT Addu Power on September 1, 2024 and sell it today you would earn a total of 697.00 from holding KOT Addu Power or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KOT Addu Power vs. Roshan Packages
Performance |
| Timeline |
| KOT Addu Power |
| Roshan Packages |
KOT Addu and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOT Addu and Roshan Packages
The main advantage of trading using opposite KOT Addu and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOT Addu position performs unexpectedly, Roshan Packages 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 Roshan Packages will offset losses from the drop in Roshan Packages' long position.| KOT Addu vs. Oil and Gas | KOT Addu vs. Pakistan State Oil | KOT Addu vs. Pakistan Petroleum | KOT Addu vs. Fauji Fertilizer |
| Roshan Packages vs. Data Agro | Roshan Packages vs. Hi Tech Lubricants | Roshan Packages vs. Pakistan Telecommunication | Roshan Packages vs. Adamjee 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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