Correlation Between Pakistan Hotel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pakistan Hotel and Dow Jones 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 Hotel and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Hotel Developers and Dow Jones Industrial, you can compare the effects of market volatilities on Pakistan Hotel and Dow Jones 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 Hotel with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Hotel and Dow Jones.
Diversification Opportunities for Pakistan Hotel and Dow Jones
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pakistan and Dow is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Hotel Developers and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Pakistan Hotel 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 Hotel Developers are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Pakistan Hotel i.e., Pakistan Hotel and Dow Jones go up and down completely randomly.
Pair Corralation between Pakistan Hotel and Dow Jones
Assuming the 90 days trading horizon Pakistan Hotel Developers is expected to generate 16.15 times more return on investment than Dow Jones. However, Pakistan Hotel is 16.15 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 44,467 in Pakistan Hotel Developers on September 4, 2024 and sell it today you would lose (40,233) from holding Pakistan Hotel Developers or give up 90.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.28% |
| Values | Daily Returns |
Pakistan Hotel Developers vs. Dow Jones Industrial
Performance |
| Timeline |
Pakistan Hotel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pakistan Hotel Developers
Pair trading matchups for Pakistan Hotel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pakistan Hotel and Dow Jones
The main advantage of trading using opposite Pakistan Hotel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Hotel position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Pakistan Hotel vs. Security Investment Bank | Pakistan Hotel vs. Dost Steels | Pakistan Hotel vs. Nimir Industrial Chemical | Pakistan Hotel vs. JS Investments |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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