Correlation Between Pakistan International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pakistan International 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 International 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 International Bulk and Dow Jones Industrial, you can compare the effects of market volatilities on Pakistan International 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan International and Dow Jones.
Diversification Opportunities for Pakistan International and Dow Jones
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakistan and Dow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan International Bulk 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 International 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 International Bulk 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 International i.e., Pakistan International and Dow Jones go up and down completely randomly.
Pair Corralation between Pakistan International and Dow Jones
Assuming the 90 days trading horizon Pakistan International Bulk is expected to generate 159.41 times more return on investment than Dow Jones. However, Pakistan International is 159.41 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 773.00 in Pakistan International Bulk on September 12, 2024 and sell it today you would earn a total of 34.00 from holding Pakistan International Bulk or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Pakistan International Bulk vs. Dow Jones Industrial
Performance |
| Timeline |
Pakistan International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pakistan International Bulk
Pair trading matchups for Pakistan International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pakistan International and Dow Jones
The main advantage of trading using opposite Pakistan International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan International 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 International vs. MCB Bank | Pakistan International vs. Faysal Bank | Pakistan International vs. Allied Bank | Pakistan International vs. National Bank of |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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