Correlation Between Pakistan Tobacco and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco and Hi Tech 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 Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Hi Tech Lubricants, you can compare the effects of market volatilities on Pakistan Tobacco and Hi Tech 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 Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Hi Tech.
Diversification Opportunities for Pakistan Tobacco and Hi Tech
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pakistan and HTL is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants 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 Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Pakistan Tobacco i.e., Pakistan Tobacco and Hi Tech go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Hi Tech
Assuming the 90 days trading horizon Pakistan Tobacco is expected to generate 0.36 times more return on investment than Hi Tech. However, Pakistan Tobacco is 2.78 times less risky than Hi Tech. It trades about -0.12 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about -0.13 per unit of risk. If you would invest 128,271 in Pakistan Tobacco on November 2, 2024 and sell it today you would lose (3,271) from holding Pakistan Tobacco or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Tobacco vs. Hi Tech Lubricants
Performance |
| Timeline |
| Pakistan Tobacco |
| Hi Tech Lubricants |
Pakistan Tobacco and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Hi Tech
The main advantage of trading using opposite Pakistan Tobacco and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| Pakistan Tobacco vs. IBL HealthCare | Pakistan Tobacco vs. National Bank of | Pakistan Tobacco vs. Engro Polymer Chemicals | Pakistan Tobacco vs. Shaheen Insurance |
| Hi Tech vs. JS Global Banking | Hi Tech vs. Pakistan Reinsurance | Hi Tech vs. Jubilee Life Insurance | Hi Tech vs. Bank of Punjab |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |