Correlation Between National Bank and Pakistan International
Can any of the company-specific risk be diversified away by investing in both National Bank and Pakistan International 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 Pakistan International 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 Pakistan International Bulk, you can compare the effects of market volatilities on National Bank and Pakistan International 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 Pakistan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Pakistan International.
Diversification Opportunities for National Bank and Pakistan International
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Pakistan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Pakistan International Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan International 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 Pakistan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan International has no effect on the direction of National Bank i.e., National Bank and Pakistan International go up and down completely randomly.
Pair Corralation between National Bank and Pakistan International
Assuming the 90 days trading horizon National Bank of is expected to generate 0.68 times more return on investment than Pakistan International. However, National Bank of is 1.48 times less risky than Pakistan International. It trades about 0.35 of its potential returns per unit of risk. Pakistan International Bulk is currently generating about 0.15 per unit of risk. If you would invest 6,009 in National Bank of on September 13, 2024 and sell it today you would earn a total of 1,473 from holding National Bank of or generate 24.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Pakistan International Bulk
Performance |
| Timeline |
| National Bank |
| Pakistan International |
National Bank and Pakistan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Pakistan International
The main advantage of trading using opposite National Bank and Pakistan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Pakistan International 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 International will offset losses from the drop in Pakistan International's long position.| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank vs. Mari Petroleum |
| Pakistan International vs. The Organic Meat | Pakistan International vs. National Foods | Pakistan International vs. Air Link Communication | Pakistan International vs. Big Bird Foods |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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