Correlation Between National Bank and National Refinery
Can any of the company-specific risk be diversified away by investing in both National Bank and National Refinery 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 National Bank and National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and National Refinery, you can compare the effects of market volatilities on National Bank and National Refinery 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 National Bank with a short position of National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and National Refinery.
Diversification Opportunities for National Bank and National Refinery
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and National is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery and National Bank 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 National Bank of are associated (or correlated) with National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of National Bank i.e., National Bank and National Refinery go up and down completely randomly.
Pair Corralation between National Bank and National Refinery
Assuming the 90 days trading horizon National Bank of is expected to generate 1.22 times more return on investment than National Refinery. However, National Bank is 1.22 times more volatile than National Refinery. It trades about 0.17 of its potential returns per unit of risk. National Refinery is currently generating about -0.04 per unit of risk. If you would invest 3,922 in National Bank of on September 2, 2024 and sell it today you would earn a total of 3,172 from holding National Bank of or generate 80.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. National Refinery
Performance |
| Timeline |
| National Bank |
| National Refinery |
National Bank and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and National Refinery
The main advantage of trading using opposite National Bank and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank vs. Mari Petroleum |
| National Refinery vs. Security Investment Bank | National Refinery vs. TPL Insurance | National Refinery vs. Pakistan Telecommunication | National Refinery vs. JS Investments |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |