Correlation Between Pakistan Aluminium and Pakistan Petroleum
Can any of the company-specific risk be diversified away by investing in both Pakistan Aluminium and Pakistan Petroleum 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 Pakistan Aluminium and Pakistan Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Aluminium Beverage and Pakistan Petroleum, you can compare the effects of market volatilities on Pakistan Aluminium and Pakistan Petroleum 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 Pakistan Aluminium with a short position of Pakistan Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Aluminium and Pakistan Petroleum.
Diversification Opportunities for Pakistan Aluminium and Pakistan Petroleum
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Pakistan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Aluminium Beverage and Pakistan Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Petroleum and Pakistan Aluminium 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 Pakistan Aluminium Beverage are associated (or correlated) with Pakistan Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Petroleum has no effect on the direction of Pakistan Aluminium i.e., Pakistan Aluminium and Pakistan Petroleum go up and down completely randomly.
Pair Corralation between Pakistan Aluminium and Pakistan Petroleum
Assuming the 90 days trading horizon Pakistan Aluminium Beverage is expected to generate 1.19 times more return on investment than Pakistan Petroleum. However, Pakistan Aluminium is 1.19 times more volatile than Pakistan Petroleum. It trades about 0.15 of its potential returns per unit of risk. Pakistan Petroleum is currently generating about 0.18 per unit of risk. If you would invest 8,440 in Pakistan Aluminium Beverage on October 25, 2024 and sell it today you would earn a total of 2,963 from holding Pakistan Aluminium Beverage or generate 35.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Pakistan Aluminium Beverage vs. Pakistan Petroleum
Performance |
| Timeline |
| Pakistan Aluminium |
| Pakistan Petroleum |
Pakistan Aluminium and Pakistan Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Aluminium and Pakistan Petroleum
The main advantage of trading using opposite Pakistan Aluminium and Pakistan Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Aluminium position performs unexpectedly, Pakistan Petroleum 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 Petroleum will offset losses from the drop in Pakistan Petroleum's long position.| Pakistan Aluminium vs. Atlas Insurance | Pakistan Aluminium vs. IGI Life Insurance | Pakistan Aluminium vs. Askari General Insurance | Pakistan Aluminium vs. Reliance Insurance Co |
| Pakistan Petroleum vs. Pakistan Aluminium Beverage | Pakistan Petroleum vs. United Insurance | Pakistan Petroleum vs. EFU General Insurance | Pakistan Petroleum vs. Crescent Steel Allied |
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 Stocks Directory module to find actively traded stocks across global markets.
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