Correlation Between Network18 Media and Punjab Sind

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Can any of the company-specific risk be diversified away by investing in both Network18 Media and Punjab Sind 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 Network18 Media and Punjab Sind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Network18 Media Investments and Punjab Sind Bank, you can compare the effects of market volatilities on Network18 Media and Punjab Sind 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 Network18 Media with a short position of Punjab Sind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Punjab Sind.

Diversification Opportunities for Network18 Media and Punjab Sind

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Network18 and Punjab is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank and Network18 Media 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 Network18 Media Investments are associated (or correlated) with Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Network18 Media i.e., Network18 Media and Punjab Sind go up and down completely randomly.

Pair Corralation between Network18 Media and Punjab Sind

Assuming the 90 days trading horizon Network18 Media Investments is expected to generate 1.46 times more return on investment than Punjab Sind. However, Network18 Media is 1.46 times more volatile than Punjab Sind Bank. It trades about -0.02 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about -0.04 per unit of risk. If you would invest  8,111  in Network18 Media Investments on August 31, 2024 and sell it today you would lose (191.00) from holding Network18 Media Investments or give up 2.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Network18 Media Investments  vs.  Punjab Sind Bank

 Performance 
       Timeline  
Network18 Media Inve 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Network18 Media Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Punjab Sind Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Network18 Media and Punjab Sind Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Network18 Media and Punjab Sind

The main advantage of trading using opposite Network18 Media and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Punjab Sind 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 Punjab Sind will offset losses from the drop in Punjab Sind's long position.
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The idea behind Network18 Media Investments and Punjab Sind Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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