Correlation Between Pak Datacom and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Pak Datacom and Century Insurance 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 Pak Datacom and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Datacom and Century Insurance, you can compare the effects of market volatilities on Pak Datacom and Century Insurance 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 Pak Datacom with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Datacom and Century Insurance.
Diversification Opportunities for Pak Datacom and Century Insurance
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pak and Century is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pak Datacom and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and Pak Datacom 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 Pak Datacom are associated (or correlated) with Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Pak Datacom i.e., Pak Datacom and Century Insurance go up and down completely randomly.
Pair Corralation between Pak Datacom and Century Insurance
Assuming the 90 days trading horizon Pak Datacom is expected to generate 3.04 times less return on investment than Century Insurance. But when comparing it to its historical volatility, Pak Datacom is 1.35 times less risky than Century Insurance. It trades about 0.05 of its potential returns per unit of risk. Century Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,219 in Century Insurance on August 27, 2024 and sell it today you would earn a total of 2,381 from holding Century Insurance or generate 195.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.28% |
| Values | Daily Returns |
Pak Datacom vs. Century Insurance
Performance |
| Timeline |
| Pak Datacom |
| Century Insurance |
Pak Datacom and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Datacom and Century Insurance
The main advantage of trading using opposite Pak Datacom and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Datacom position performs unexpectedly, Century Insurance 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Pak Datacom vs. Masood Textile Mills | Pak Datacom vs. Fauji Foods | Pak Datacom vs. KSB Pumps | Pak Datacom vs. Mari Petroleum |
| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century Insurance vs. MCB Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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