Correlation Between Pakistan Engineering and Pakistan Hotel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Pakistan Engineering and Pakistan Hotel 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 Engineering and Pakistan Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Engineering and Pakistan Hotel Developers, you can compare the effects of market volatilities on Pakistan Engineering and Pakistan Hotel 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 Engineering with a short position of Pakistan Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Engineering and Pakistan Hotel.

Diversification Opportunities for Pakistan Engineering and Pakistan Hotel

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Pakistan and Pakistan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Engineering and Pakistan Hotel Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Hotel Developers and Pakistan Engineering 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 Engineering are associated (or correlated) with Pakistan Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Hotel Developers has no effect on the direction of Pakistan Engineering i.e., Pakistan Engineering and Pakistan Hotel go up and down completely randomly.

Pair Corralation between Pakistan Engineering and Pakistan Hotel

Assuming the 90 days trading horizon Pakistan Engineering is expected to under-perform the Pakistan Hotel. In addition to that, Pakistan Engineering is 1.25 times more volatile than Pakistan Hotel Developers. It trades about -0.17 of its total potential returns per unit of risk. Pakistan Hotel Developers is currently generating about 0.29 per unit of volatility. If you would invest  3,546  in Pakistan Hotel Developers on September 4, 2024 and sell it today you would earn a total of  688.00  from holding Pakistan Hotel Developers or generate 19.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Pakistan Engineering  vs.  Pakistan Hotel Developers

 Performance 
       Timeline  
Pakistan Engineering 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pakistan Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Pakistan Hotel Developers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pakistan Hotel Developers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pakistan Engineering and Pakistan Hotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pakistan Engineering and Pakistan Hotel

The main advantage of trading using opposite Pakistan Engineering and Pakistan Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Engineering position performs unexpectedly, Pakistan Hotel 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 Hotel will offset losses from the drop in Pakistan Hotel's long position.
The idea behind Pakistan Engineering and Pakistan Hotel Developers pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Fundamental Analysis
View fundamental data based on most recent published financial statements
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios