Correlation Between Pakistan Petroleum and Hinopak Motors
Can any of the company-specific risk be diversified away by investing in both Pakistan Petroleum and Hinopak Motors 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 Petroleum and Hinopak Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Petroleum and Hinopak Motors, you can compare the effects of market volatilities on Pakistan Petroleum and Hinopak Motors 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 Petroleum with a short position of Hinopak Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Petroleum and Hinopak Motors.
Diversification Opportunities for Pakistan Petroleum and Hinopak Motors
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakistan and Hinopak is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Petroleum and Hinopak Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinopak Motors and Pakistan Petroleum 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 Petroleum are associated (or correlated) with Hinopak Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinopak Motors has no effect on the direction of Pakistan Petroleum i.e., Pakistan Petroleum and Hinopak Motors go up and down completely randomly.
Pair Corralation between Pakistan Petroleum and Hinopak Motors
Assuming the 90 days trading horizon Pakistan Petroleum is expected to generate 1.03 times more return on investment than Hinopak Motors. However, Pakistan Petroleum is 1.03 times more volatile than Hinopak Motors. It trades about 0.2 of its potential returns per unit of risk. Hinopak Motors is currently generating about 0.2 per unit of risk. If you would invest 14,948 in Pakistan Petroleum on September 2, 2024 and sell it today you would earn a total of 1,854 from holding Pakistan Petroleum or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Petroleum vs. Hinopak Motors
Performance |
| Timeline |
| Pakistan Petroleum |
| Hinopak Motors |
Pakistan Petroleum and Hinopak Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Petroleum and Hinopak Motors
The main advantage of trading using opposite Pakistan Petroleum and Hinopak Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Petroleum position performs unexpectedly, Hinopak Motors 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 Hinopak Motors will offset losses from the drop in Hinopak Motors' long position.| Pakistan Petroleum vs. 786 Investment Limited | Pakistan Petroleum vs. JS Investments | Pakistan Petroleum vs. Air Link Communication | Pakistan Petroleum vs. Pakistan Telecommunication |
| Hinopak Motors vs. Masood Textile Mills | Hinopak Motors vs. Fauji Foods | Hinopak Motors vs. Mari Petroleum | Hinopak Motors vs. Loads |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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