Correlation Between Karachi 100 and Pakistan Reinsurance
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By analyzing existing cross correlation between Karachi 100 and Pakistan Reinsurance, you can compare the effects of market volatilities on Karachi 100 and Pakistan Reinsurance 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 Pakistan Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karachi 100 and Pakistan Reinsurance.
Diversification Opportunities for Karachi 100 and Pakistan Reinsurance
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Karachi and Pakistan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Karachi 100 and Pakistan Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Reinsurance 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 Pakistan Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Reinsurance has no effect on the direction of Karachi 100 i.e., Karachi 100 and Pakistan Reinsurance go up and down completely randomly.
Pair Corralation between Karachi 100 and Pakistan Reinsurance
Assuming the 90 days trading horizon Karachi 100 is expected to generate 0.86 times more return on investment than Pakistan Reinsurance. However, Karachi 100 is 1.16 times less risky than Pakistan Reinsurance. It trades about -0.01 of its potential returns per unit of risk. Pakistan Reinsurance is currently generating about -0.28 per unit of risk. If you would invest 11,418,100 in Karachi 100 on October 13, 2024 and sell it today you would lose (93,400) from holding Karachi 100 or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karachi 100 vs. Pakistan Reinsurance
Performance |
| Timeline |
Karachi 100 and Pakistan Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Karachi 100
Pair trading matchups for Karachi 100
Pakistan Reinsurance
Pair trading matchups for Pakistan Reinsurance
Pair Trading with Karachi 100 and Pakistan Reinsurance
The main advantage of trading using opposite Karachi 100 and Pakistan Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karachi 100 position performs unexpectedly, Pakistan Reinsurance 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 Reinsurance will offset losses from the drop in Pakistan Reinsurance's long position.| Karachi 100 vs. Mughal Iron Steel | Karachi 100 vs. Crescent Steel Allied | Karachi 100 vs. Pakistan Telecommunication | Karachi 100 vs. Ittehad Chemicals |
| Pakistan Reinsurance vs. Hi Tech Lubricants | Pakistan Reinsurance vs. Universal Insurance | Pakistan Reinsurance vs. Allied Bank | Pakistan Reinsurance vs. JS Bank |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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