Correlation Between Karachi 100 and Colgate Palmolive
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By analyzing existing cross correlation between Karachi 100 and Colgate Palmolive Pakistan, you can compare the effects of market volatilities on Karachi 100 and Colgate Palmolive 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 Karachi 100 with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karachi 100 and Colgate Palmolive.
Diversification Opportunities for Karachi 100 and Colgate Palmolive
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Karachi and Colgate is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Karachi 100 and Colgate Palmolive Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Karachi 100 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 Karachi 100 are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Karachi 100 i.e., Karachi 100 and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Karachi 100 and Colgate Palmolive
Assuming the 90 days trading horizon Karachi 100 is expected to generate 0.6 times more return on investment than Colgate Palmolive. However, Karachi 100 is 1.66 times less risky than Colgate Palmolive. It trades about 0.41 of its potential returns per unit of risk. Colgate Palmolive Pakistan is currently generating about 0.24 per unit of risk. If you would invest 8,111,420 in Karachi 100 on August 31, 2024 and sell it today you would earn a total of 1,896,880 from holding Karachi 100 or generate 23.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.78% |
| Values | Daily Returns |
Karachi 100 vs. Colgate Palmolive Pakistan
Performance |
| Timeline |
Karachi 100 and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Karachi 100
Pair trading matchups for Karachi 100
Colgate Palmolive Pakistan
Pair trading matchups for Colgate Palmolive
Pair Trading with Karachi 100 and Colgate Palmolive
The main advantage of trading using opposite Karachi 100 and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karachi 100 position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Karachi 100 vs. Aisha Steel Mills | Karachi 100 vs. Dost Steels | Karachi 100 vs. Askari General Insurance | Karachi 100 vs. International Steels |
| Colgate Palmolive vs. Engro Polymer Chemicals | Colgate Palmolive vs. Pakistan Hotel Developers | Colgate Palmolive vs. United Insurance | Colgate Palmolive vs. Sardar Chemical Industries |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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