Correlation Between KSB Pumps and Pakistan Oilfields
Can any of the company-specific risk be diversified away by investing in both KSB Pumps and Pakistan Oilfields 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 KSB Pumps and Pakistan Oilfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSB Pumps and Pakistan Oilfields, you can compare the effects of market volatilities on KSB Pumps and Pakistan Oilfields 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 KSB Pumps with a short position of Pakistan Oilfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSB Pumps and Pakistan Oilfields.
Diversification Opportunities for KSB Pumps and Pakistan Oilfields
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KSB and Pakistan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KSB Pumps and Pakistan Oilfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Oilfields and KSB Pumps 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 KSB Pumps are associated (or correlated) with Pakistan Oilfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Oilfields has no effect on the direction of KSB Pumps i.e., KSB Pumps and Pakistan Oilfields go up and down completely randomly.
Pair Corralation between KSB Pumps and Pakistan Oilfields
Assuming the 90 days trading horizon KSB Pumps is expected to generate 1.68 times less return on investment than Pakistan Oilfields. In addition to that, KSB Pumps is 1.79 times more volatile than Pakistan Oilfields. It trades about 0.06 of its total potential returns per unit of risk. Pakistan Oilfields is currently generating about 0.17 per unit of volatility. If you would invest 40,344 in Pakistan Oilfields on September 3, 2024 and sell it today you would earn a total of 17,229 from holding Pakistan Oilfields or generate 42.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KSB Pumps vs. Pakistan Oilfields
Performance |
| Timeline |
| KSB Pumps |
| Pakistan Oilfields |
KSB Pumps and Pakistan Oilfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KSB Pumps and Pakistan Oilfields
The main advantage of trading using opposite KSB Pumps and Pakistan Oilfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSB Pumps position performs unexpectedly, Pakistan Oilfields 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 Oilfields will offset losses from the drop in Pakistan Oilfields' long position.| KSB Pumps vs. Masood Textile Mills | KSB Pumps vs. Fauji Foods | KSB Pumps vs. Mari Petroleum | KSB Pumps vs. Loads |
| Pakistan Oilfields vs. WorldCall Telecom | Pakistan Oilfields vs. Pak Datacom | Pakistan Oilfields vs. Pak Gulf Leasing | Pakistan Oilfields vs. Hi Tech Lubricants |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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