Correlation Between Pak Datacom and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Pak Datacom and Grays Leasing 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 Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Datacom and Grays Leasing, you can compare the effects of market volatilities on Pak Datacom and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Datacom and Grays Leasing.
Diversification Opportunities for Pak Datacom and Grays Leasing
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pak and Grays is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pak Datacom and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Pak Datacom i.e., Pak Datacom and Grays Leasing go up and down completely randomly.
Pair Corralation between Pak Datacom and Grays Leasing
Assuming the 90 days trading horizon Pak Datacom is expected to generate 0.99 times more return on investment than Grays Leasing. However, Pak Datacom is 1.01 times less risky than Grays Leasing. It trades about 0.14 of its potential returns per unit of risk. Grays Leasing is currently generating about 0.03 per unit of risk. If you would invest 6,599 in Pak Datacom on August 28, 2024 and sell it today you would earn a total of 620.00 from holding Pak Datacom or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pak Datacom vs. Grays Leasing
Performance |
| Timeline |
| Pak Datacom |
| Grays Leasing |
Pak Datacom and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Datacom and Grays Leasing
The main advantage of trading using opposite Pak Datacom and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Datacom position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| Pak Datacom vs. Faysal Bank | Pak Datacom vs. Soneri Bank | Pak Datacom vs. MCB Bank | Pak Datacom vs. Jubilee Life Insurance |
| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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