Correlation Between Pakistan Reinsurance and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Pakistan Reinsurance and Pakistan Telecommunicatio 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 Reinsurance and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Reinsurance and Pakistan Telecommunication, you can compare the effects of market volatilities on Pakistan Reinsurance and Pakistan Telecommunicatio 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 Reinsurance with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Reinsurance and Pakistan Telecommunicatio.
Diversification Opportunities for Pakistan Reinsurance and Pakistan Telecommunicatio
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Pakistan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Reinsurance and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and Pakistan Reinsurance 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 Reinsurance are associated (or correlated) with Pakistan Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Pakistan Reinsurance i.e., Pakistan Reinsurance and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Pakistan Reinsurance and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Pakistan Reinsurance is expected to generate 0.58 times more return on investment than Pakistan Telecommunicatio. However, Pakistan Reinsurance is 1.72 times less risky than Pakistan Telecommunicatio. It trades about -0.2 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about -0.24 per unit of risk. If you would invest 1,537 in Pakistan Reinsurance on November 3, 2024 and sell it today you would lose (87.00) from holding Pakistan Reinsurance or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Reinsurance vs. Pakistan Telecommunication
Performance |
| Timeline |
| Pakistan Reinsurance |
| Pakistan Telecommunicatio |
Pakistan Reinsurance and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Reinsurance and Pakistan Telecommunicatio
The main advantage of trading using opposite Pakistan Reinsurance and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Reinsurance position performs unexpectedly, Pakistan Telecommunicatio 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 Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| Pakistan Reinsurance vs. Masood Textile Mills | Pakistan Reinsurance vs. Fauji Foods | Pakistan Reinsurance vs. KSB Pumps | Pakistan Reinsurance vs. Mari Petroleum |
| Pakistan Telecommunicatio vs. Matco Foods | Pakistan Telecommunicatio vs. Hi Tech Lubricants | Pakistan Telecommunicatio vs. National Foods | Pakistan Telecommunicatio vs. Honda Atlas Cars |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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