Correlation Between Pakistan Petroleum and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both Pakistan Petroleum and Roshan Packages 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 Roshan Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Petroleum and Roshan Packages, you can compare the effects of market volatilities on Pakistan Petroleum and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Petroleum and Roshan Packages.
Diversification Opportunities for Pakistan Petroleum and Roshan Packages
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Roshan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Petroleum and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of Pakistan Petroleum i.e., Pakistan Petroleum and Roshan Packages go up and down completely randomly.
Pair Corralation between Pakistan Petroleum and Roshan Packages
Assuming the 90 days trading horizon Pakistan Petroleum is expected to generate 0.85 times more return on investment than Roshan Packages. However, Pakistan Petroleum is 1.17 times less risky than Roshan Packages. It trades about 0.08 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.05 per unit of risk. If you would invest 11,537 in Pakistan Petroleum on September 12, 2024 and sell it today you would earn a total of 5,870 from holding Pakistan Petroleum or generate 50.88% 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. Roshan Packages
Performance |
| Timeline |
| Pakistan Petroleum |
| Roshan Packages |
Pakistan Petroleum and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Petroleum and Roshan Packages
The main advantage of trading using opposite Pakistan Petroleum and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Petroleum position performs unexpectedly, Roshan Packages 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 Roshan Packages will offset losses from the drop in Roshan Packages' long position.| Pakistan Petroleum vs. Masood Textile Mills | Pakistan Petroleum vs. Fauji Foods | Pakistan Petroleum vs. KSB Pumps | Pakistan Petroleum vs. Mari Petroleum |
| Roshan Packages vs. Oil and Gas | Roshan Packages vs. Pakistan State Oil | Roshan Packages vs. Pakistan Petroleum | Roshan Packages vs. Fauji Fertilizer |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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