Correlation Between Nestle Pakistan and Hinopak Motors
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By analyzing existing cross correlation between Nestle Pakistan and Hinopak Motors, you can compare the effects of market volatilities on Nestle Pakistan and Hinopak Motors 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 Nestle Pakistan with a short position of Hinopak Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle Pakistan and Hinopak Motors.
Diversification Opportunities for Nestle Pakistan and Hinopak Motors
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nestle and Hinopak is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nestle Pakistan and Hinopak Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinopak Motors and Nestle Pakistan 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 Nestle Pakistan are associated (or correlated) with Hinopak Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinopak Motors has no effect on the direction of Nestle Pakistan i.e., Nestle Pakistan and Hinopak Motors go up and down completely randomly.
Pair Corralation between Nestle Pakistan and Hinopak Motors
Assuming the 90 days trading horizon Nestle Pakistan is expected to under-perform the Hinopak Motors. But the stock apears to be less risky and, when comparing its historical volatility, Nestle Pakistan is 2.76 times less risky than Hinopak Motors. The stock trades about -0.04 of its potential returns per unit of risk. The Hinopak Motors is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 28,851 in Hinopak Motors on August 31, 2024 and sell it today you would earn a total of 315.00 from holding Hinopak Motors or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestle Pakistan vs. Hinopak Motors
Performance |
| Timeline |
| Nestle Pakistan |
| Hinopak Motors |
Nestle Pakistan and Hinopak Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle Pakistan and Hinopak Motors
The main advantage of trading using opposite Nestle Pakistan and Hinopak Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle Pakistan position performs unexpectedly, Hinopak Motors 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 Hinopak Motors will offset losses from the drop in Hinopak Motors' long position.| Nestle Pakistan vs. Quice Food Industries | Nestle Pakistan vs. Agha Steel Industries | Nestle Pakistan vs. National Foods | Nestle Pakistan vs. Pakistan Aluminium Beverage |
| Hinopak Motors vs. Masood Textile Mills | Hinopak Motors vs. Fauji Foods | Hinopak Motors vs. KSB Pumps | Hinopak Motors 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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