Correlation Between Masood Textile and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Masood Textile and Bank of Punjab 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 Masood Textile and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masood Textile Mills and Bank of Punjab, you can compare the effects of market volatilities on Masood Textile and Bank of Punjab 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 Masood Textile with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Bank of Punjab.
Diversification Opportunities for Masood Textile and Bank of Punjab
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Masood and Bank is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and Masood Textile 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 Masood Textile Mills are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Masood Textile i.e., Masood Textile and Bank of Punjab go up and down completely randomly.
Pair Corralation between Masood Textile and Bank of Punjab
Assuming the 90 days trading horizon Masood Textile is expected to generate 1.77 times less return on investment than Bank of Punjab. In addition to that, Masood Textile is 1.41 times more volatile than Bank of Punjab. It trades about 0.05 of its total potential returns per unit of risk. Bank of Punjab is currently generating about 0.11 per unit of volatility. If you would invest 301.00 in Bank of Punjab on September 2, 2024 and sell it today you would earn a total of 619.00 from holding Bank of Punjab or generate 205.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 54.97% |
| Values | Daily Returns |
Masood Textile Mills vs. Bank of Punjab
Performance |
| Timeline |
| Masood Textile Mills |
| Bank of Punjab |
Masood Textile and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Bank of Punjab
The main advantage of trading using opposite Masood Textile and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
| Bank of Punjab vs. Oil and Gas | Bank of Punjab vs. Pakistan State Oil | Bank of Punjab vs. Pakistan Petroleum | Bank of Punjab vs. Fauji Fertilizer |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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