Correlation Between Packages and Silkbank
Can any of the company-specific risk be diversified away by investing in both Packages and Silkbank 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 Packages and Silkbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packages and Silkbank, you can compare the effects of market volatilities on Packages and Silkbank 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 Packages with a short position of Silkbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packages and Silkbank.
Diversification Opportunities for Packages and Silkbank
Very good diversification
The 3 months correlation between Packages and Silkbank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Packages and Silkbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkbank and Packages 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 Packages are associated (or correlated) with Silkbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkbank has no effect on the direction of Packages i.e., Packages and Silkbank go up and down completely randomly.
Pair Corralation between Packages and Silkbank
Assuming the 90 days trading horizon Packages is expected to generate 2.75 times more return on investment than Silkbank. However, Packages is 2.75 times more volatile than Silkbank. It trades about 0.51 of its potential returns per unit of risk. Silkbank is currently generating about -0.08 per unit of risk. If you would invest 42,642 in Packages on September 2, 2024 and sell it today you would earn a total of 17,757 from holding Packages or generate 41.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packages vs. Silkbank
Performance |
| Timeline |
| Packages |
| Silkbank |
Packages and Silkbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packages and Silkbank
The main advantage of trading using opposite Packages and Silkbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packages position performs unexpectedly, Silkbank 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 Silkbank will offset losses from the drop in Silkbank's long position.| Packages vs. JS Global Banking | Packages vs. Crescent Star Insurance | Packages vs. MCB Bank | Packages vs. Century Insurance |
| Silkbank vs. Masood Textile Mills | Silkbank vs. Fauji Foods | Silkbank vs. KSB Pumps | Silkbank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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