Correlation Between Pakistan Tobacco and Al Shaheer
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco and Al Shaheer 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 Tobacco and Al Shaheer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Al Shaheer, you can compare the effects of market volatilities on Pakistan Tobacco and Al Shaheer 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 Tobacco with a short position of Al Shaheer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Al Shaheer.
Diversification Opportunities for Pakistan Tobacco and Al Shaheer
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pakistan and ASC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco and Al Shaheer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Shaheer and Pakistan Tobacco 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 Tobacco are associated (or correlated) with Al Shaheer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Shaheer has no effect on the direction of Pakistan Tobacco i.e., Pakistan Tobacco and Al Shaheer go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Al Shaheer
Assuming the 90 days trading horizon Pakistan Tobacco is expected to generate 1.19 times less return on investment than Al Shaheer. But when comparing it to its historical volatility, Pakistan Tobacco is 1.39 times less risky than Al Shaheer. It trades about 0.24 of its potential returns per unit of risk. Al Shaheer is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 585.00 in Al Shaheer on September 12, 2024 and sell it today you would earn a total of 218.00 from holding Al Shaheer or generate 37.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Pakistan Tobacco vs. Al Shaheer
Performance |
| Timeline |
| Pakistan Tobacco |
| Al Shaheer |
Pakistan Tobacco and Al Shaheer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Al Shaheer
The main advantage of trading using opposite Pakistan Tobacco and Al Shaheer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco position performs unexpectedly, Al Shaheer 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 Al Shaheer will offset losses from the drop in Al Shaheer's long position.| Pakistan Tobacco vs. Masood Textile Mills | Pakistan Tobacco vs. Fauji Foods | Pakistan Tobacco vs. KSB Pumps | Pakistan Tobacco vs. Mari Petroleum |
| Al Shaheer vs. Unity Foods | Al Shaheer vs. Lotte Chemical Pakistan | Al Shaheer vs. Agritech | Al Shaheer vs. JS Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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