Correlation Between Pakistan Hotel and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Pakistan Hotel and Gul Ahmed 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 Gul Ahmed 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 Gul Ahmed Textile, you can compare the effects of market volatilities on Pakistan Hotel and Gul Ahmed 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 Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Hotel and Gul Ahmed.
Diversification Opportunities for Pakistan Hotel and Gul Ahmed
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pakistan and Gul is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Hotel Developers and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile 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 Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Pakistan Hotel i.e., Pakistan Hotel and Gul Ahmed go up and down completely randomly.
Pair Corralation between Pakistan Hotel and Gul Ahmed
Assuming the 90 days trading horizon Pakistan Hotel Developers is expected to generate 4.04 times more return on investment than Gul Ahmed. However, Pakistan Hotel is 4.04 times more volatile than Gul Ahmed Textile. It trades about 0.18 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.05 per unit of risk. If you would invest 7,575 in Pakistan Hotel Developers on September 14, 2024 and sell it today you would lose (1,546) from holding Pakistan Hotel Developers or give up 20.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.69% |
| Values | Daily Returns |
Pakistan Hotel Developers vs. Gul Ahmed Textile
Performance |
| Timeline |
| Pakistan Hotel Developers |
| Gul Ahmed Textile |
Pakistan Hotel and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Hotel and Gul Ahmed
The main advantage of trading using opposite Pakistan Hotel and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Hotel position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Pakistan Hotel vs. Habib Insurance | Pakistan Hotel vs. Ghandhara Automobile | Pakistan Hotel vs. Century Insurance | Pakistan Hotel vs. Reliance Weaving Mills |
| Gul Ahmed vs. Data Agro | Gul Ahmed vs. Air Link Communication | Gul Ahmed vs. Sardar Chemical Industries | Gul Ahmed vs. Pakistan Hotel Developers |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |