Correlation Between Pakistan Tobacco and Big Bird
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco and Big Bird 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 Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Big Bird Foods, you can compare the effects of market volatilities on Pakistan Tobacco and Big Bird 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 Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Big Bird.
Diversification Opportunities for Pakistan Tobacco and Big Bird
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pakistan and Big is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods 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 Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Pakistan Tobacco i.e., Pakistan Tobacco and Big Bird go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Big Bird
Assuming the 90 days trading horizon Pakistan Tobacco is expected to generate 0.48 times more return on investment than Big Bird. However, Pakistan Tobacco is 2.1 times less risky than Big Bird. It trades about -0.07 of its potential returns per unit of risk. Big Bird Foods is currently generating about -0.26 per unit of risk. If you would invest 127,200 in Pakistan Tobacco on September 2, 2024 and sell it today you would lose (3,681) from holding Pakistan Tobacco or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Tobacco vs. Big Bird Foods
Performance |
| Timeline |
| Pakistan Tobacco |
| Big Bird Foods |
Pakistan Tobacco and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Big Bird
The main advantage of trading using opposite Pakistan Tobacco and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Pakistan Tobacco vs. Al Ghazi Tractors | Pakistan Tobacco vs. Shell Pakistan | Pakistan Tobacco vs. Pakistan State Oil | Pakistan Tobacco vs. Millat Tractors |
| Big Bird vs. Security Investment Bank | Big Bird vs. Meezan Bank | Big Bird vs. ITTEFAQ Iron Industries | Big Bird vs. Reliance Insurance Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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