Correlation Between Karachi 100 and Faysal Bank
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By analyzing existing cross correlation between Karachi 100 and Faysal Bank, you can compare the effects of market volatilities on Karachi 100 and Faysal Bank 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 Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karachi 100 and Faysal Bank.
Diversification Opportunities for Karachi 100 and Faysal Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Karachi and Faysal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Karachi 100 and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank 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 Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Karachi 100 i.e., Karachi 100 and Faysal Bank go up and down completely randomly.
Pair Corralation between Karachi 100 and Faysal Bank
Assuming the 90 days trading horizon Karachi 100 is expected to generate 0.38 times more return on investment than Faysal Bank. However, Karachi 100 is 2.62 times less risky than Faysal Bank. It trades about 0.19 of its potential returns per unit of risk. Faysal Bank is currently generating about -0.02 per unit of risk. If you would invest 9,019,552 in Karachi 100 on August 29, 2024 and sell it today you would earn a total of 437,864 from holding Karachi 100 or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karachi 100 vs. Faysal Bank
Performance |
| Timeline |
Karachi 100 and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Karachi 100
Pair trading matchups for Karachi 100
Faysal Bank
Pair trading matchups for Faysal Bank
Pair Trading with Karachi 100 and Faysal Bank
The main advantage of trading using opposite Karachi 100 and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karachi 100 position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Karachi 100 vs. Lotte Chemical Pakistan | Karachi 100 vs. Wah Nobel Chemicals | Karachi 100 vs. Pak Datacom | Karachi 100 vs. Nimir Industrial Chemical |
| Faysal Bank vs. Masood Textile Mills | Faysal Bank vs. Fauji Foods | Faysal Bank vs. KSB Pumps | Faysal Bank vs. Mari Petroleum |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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