Correlation Between Punjab National and Punjab Sind
Can any of the company-specific risk be diversified away by investing in both Punjab National and Punjab Sind 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 Punjab National and Punjab Sind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Punjab National Bank and Punjab Sind Bank, you can compare the effects of market volatilities on Punjab National and Punjab Sind 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 Punjab National with a short position of Punjab Sind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab National and Punjab Sind.
Diversification Opportunities for Punjab National and Punjab Sind
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Punjab and Punjab is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National Bank and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank and Punjab National 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 Punjab National Bank are associated (or correlated) with Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Punjab National i.e., Punjab National and Punjab Sind go up and down completely randomly.
Pair Corralation between Punjab National and Punjab Sind
Assuming the 90 days trading horizon Punjab National is expected to generate 1.47 times less return on investment than Punjab Sind. But when comparing it to its historical volatility, Punjab National Bank is 1.06 times less risky than Punjab Sind. It trades about 0.18 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,713 in Punjab Sind Bank on September 14, 2024 and sell it today you would earn a total of 541.00 from holding Punjab Sind Bank or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Punjab National Bank vs. Punjab Sind Bank
Performance |
| Timeline |
| Punjab National Bank |
| Punjab Sind Bank |
Punjab National and Punjab Sind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Punjab National and Punjab Sind
The main advantage of trading using opposite Punjab National and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab National position performs unexpectedly, Punjab Sind 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 Punjab Sind will offset losses from the drop in Punjab Sind's long position.| Punjab National vs. Reliance Industries Limited | Punjab National vs. State Bank of | Punjab National vs. Oil Natural Gas | Punjab National vs. ICICI Bank Limited |
| Punjab Sind vs. Hindustan Media Ventures | Punjab Sind vs. Indian Metals Ferro | Punjab Sind vs. Nahar Industrial Enterprises | Punjab Sind vs. Manaksia Coated Metals |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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