Correlation Between Pak Gulf and Escorts Investment
Can any of the company-specific risk be diversified away by investing in both Pak Gulf and Escorts Investment 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 Pak Gulf and Escorts Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Gulf Leasing and Escorts Investment Bank, you can compare the effects of market volatilities on Pak Gulf and Escorts Investment 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 Pak Gulf with a short position of Escorts Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Gulf and Escorts Investment.
Diversification Opportunities for Pak Gulf and Escorts Investment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pak and Escorts is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pak Gulf Leasing and Escorts Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escorts Investment Bank and Pak Gulf 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 Pak Gulf Leasing are associated (or correlated) with Escorts Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escorts Investment Bank has no effect on the direction of Pak Gulf i.e., Pak Gulf and Escorts Investment go up and down completely randomly.
Pair Corralation between Pak Gulf and Escorts Investment
Assuming the 90 days trading horizon Pak Gulf Leasing is expected to generate 2.21 times more return on investment than Escorts Investment. However, Pak Gulf is 2.21 times more volatile than Escorts Investment Bank. It trades about 0.17 of its potential returns per unit of risk. Escorts Investment Bank is currently generating about 0.14 per unit of risk. If you would invest 865.00 in Pak Gulf Leasing on August 27, 2024 and sell it today you would earn a total of 161.00 from holding Pak Gulf Leasing or generate 18.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pak Gulf Leasing vs. Escorts Investment Bank
Performance |
| Timeline |
| Pak Gulf Leasing |
| Escorts Investment Bank |
Pak Gulf and Escorts Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Gulf and Escorts Investment
The main advantage of trading using opposite Pak Gulf and Escorts Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Gulf position performs unexpectedly, Escorts Investment 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 Escorts Investment will offset losses from the drop in Escorts Investment's long position.| Pak Gulf vs. Masood Textile Mills | Pak Gulf vs. Fauji Foods | Pak Gulf vs. KSB Pumps | Pak Gulf vs. Mari Petroleum |
| Escorts Investment vs. Masood Textile Mills | Escorts Investment vs. Fauji Foods | Escorts Investment vs. KSB Pumps | Escorts Investment vs. Mari Petroleum |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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