Correlation Between Pakistan Petroleum and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Pakistan Petroleum and Hi Tech 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 Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Petroleum and Hi Tech Lubricants, you can compare the effects of market volatilities on Pakistan Petroleum and Hi Tech 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 Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Petroleum and Hi Tech.
Diversification Opportunities for Pakistan Petroleum and Hi Tech
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and HTL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Petroleum and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants 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 Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Pakistan Petroleum i.e., Pakistan Petroleum and Hi Tech go up and down completely randomly.
Pair Corralation between Pakistan Petroleum and Hi Tech
Assuming the 90 days trading horizon Pakistan Petroleum is expected to generate 0.75 times more return on investment than Hi Tech. However, Pakistan Petroleum is 1.33 times less risky than Hi Tech. It trades about 0.17 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.1 per unit of risk. If you would invest 13,630 in Pakistan Petroleum on October 26, 2024 and sell it today you would earn a total of 4,605 from holding Pakistan Petroleum or generate 33.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Petroleum vs. Hi Tech Lubricants
Performance |
| Timeline |
| Pakistan Petroleum |
| Hi Tech Lubricants |
Pakistan Petroleum and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Petroleum and Hi Tech
The main advantage of trading using opposite Pakistan Petroleum and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Petroleum position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| Pakistan Petroleum vs. Metropolitan Steel Corp | Pakistan Petroleum vs. Pakistan Synthetics | Pakistan Petroleum vs. Air Link Communication | Pakistan Petroleum vs. Synthetic Products Enterprises |
| Hi Tech vs. Reliance Insurance Co | Hi Tech vs. Soneri Bank | Hi Tech vs. TPL Insurance | Hi Tech vs. Adamjee Insurance |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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