Correlation Between National Refinery and Nestle Pakistan
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By analyzing existing cross correlation between National Refinery and Nestle Pakistan, you can compare the effects of market volatilities on National Refinery and Nestle Pakistan 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 Refinery with a short position of Nestle Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Refinery and Nestle Pakistan.
Diversification Opportunities for National Refinery and Nestle Pakistan
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Nestle is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding National Refinery and Nestle Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle Pakistan and National Refinery 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 Refinery are associated (or correlated) with Nestle Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle Pakistan has no effect on the direction of National Refinery i.e., National Refinery and Nestle Pakistan go up and down completely randomly.
Pair Corralation between National Refinery and Nestle Pakistan
Assuming the 90 days trading horizon National Refinery is expected to generate 4.35 times more return on investment than Nestle Pakistan. However, National Refinery is 4.35 times more volatile than Nestle Pakistan. It trades about 0.21 of its potential returns per unit of risk. Nestle Pakistan is currently generating about -0.04 per unit of risk. If you would invest 20,867 in National Refinery on August 31, 2024 and sell it today you would earn a total of 2,972 from holding National Refinery or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Refinery vs. Nestle Pakistan
Performance |
| Timeline |
| National Refinery |
| Nestle Pakistan |
National Refinery and Nestle Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Refinery and Nestle Pakistan
The main advantage of trading using opposite National Refinery and Nestle Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Refinery position performs unexpectedly, Nestle Pakistan 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 Nestle Pakistan will offset losses from the drop in Nestle Pakistan's long position.| National Refinery vs. National Bank of | National Refinery vs. United Bank | National Refinery vs. Bank Alfalah | National Refinery vs. Allied Bank |
| Nestle Pakistan vs. Quice Food Industries | Nestle Pakistan vs. Agha Steel Industries | Nestle Pakistan vs. National Foods | Nestle Pakistan vs. Pakistan Aluminium Beverage |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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