Correlation Between Pakistan Petroleum and KOT Addu
Can any of the company-specific risk be diversified away by investing in both Pakistan Petroleum and KOT Addu 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 KOT Addu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Petroleum and KOT Addu Power, you can compare the effects of market volatilities on Pakistan Petroleum and KOT Addu 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 KOT Addu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Petroleum and KOT Addu.
Diversification Opportunities for Pakistan Petroleum and KOT Addu
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pakistan and KOT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Petroleum and KOT Addu Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOT Addu Power 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 KOT Addu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOT Addu Power has no effect on the direction of Pakistan Petroleum i.e., Pakistan Petroleum and KOT Addu go up and down completely randomly.
Pair Corralation between Pakistan Petroleum and KOT Addu
Assuming the 90 days trading horizon Pakistan Petroleum is expected to under-perform the KOT Addu. In addition to that, Pakistan Petroleum is 2.18 times more volatile than KOT Addu Power. It trades about -0.14 of its total potential returns per unit of risk. KOT Addu Power is currently generating about 0.02 per unit of volatility. If you would invest 3,759 in KOT Addu Power on November 30, 2024 and sell it today you would earn a total of 20.00 from holding KOT Addu Power or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Petroleum vs. KOT Addu Power
Performance |
| Timeline |
| Pakistan Petroleum |
| KOT Addu Power |
Pakistan Petroleum and KOT Addu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Petroleum and KOT Addu
The main advantage of trading using opposite Pakistan Petroleum and KOT Addu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Petroleum position performs unexpectedly, KOT Addu 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 KOT Addu will offset losses from the drop in KOT Addu's long position.| Pakistan Petroleum vs. WorldCall Telecom | Pakistan Petroleum vs. Matco Foods | Pakistan Petroleum vs. Invest Capital Investment | Pakistan Petroleum vs. Roshan Packages |
| KOT Addu vs. Atlas Insurance | KOT Addu vs. Reliance Insurance Co | KOT Addu vs. Air Link Communication | KOT Addu vs. EFU General 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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