Correlation Between Pakistan Refinery and Big Bird
Can any of the company-specific risk be diversified away by investing in both Pakistan Refinery and Big Bird 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 Refinery and Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Refinery and Big Bird Foods, you can compare the effects of market volatilities on Pakistan Refinery and Big Bird 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 Refinery with a short position of Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Refinery and Big Bird.
Diversification Opportunities for Pakistan Refinery and Big Bird
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pakistan and Big is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Refinery and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods and Pakistan Refinery 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 Refinery are associated (or correlated) with Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Pakistan Refinery i.e., Pakistan Refinery and Big Bird go up and down completely randomly.
Pair Corralation between Pakistan Refinery and Big Bird
Assuming the 90 days trading horizon Pakistan Refinery is expected to generate 1.13 times more return on investment than Big Bird. However, Pakistan Refinery is 1.13 times more volatile than Big Bird Foods. It trades about 0.32 of its potential returns per unit of risk. Big Bird Foods is currently generating about -0.19 per unit of risk. If you would invest 2,500 in Pakistan Refinery on September 12, 2024 and sell it today you would earn a total of 826.00 from holding Pakistan Refinery or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pakistan Refinery vs. Big Bird Foods
Performance |
| Timeline |
| Pakistan Refinery |
| Big Bird Foods |
Pakistan Refinery and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Refinery and Big Bird
The main advantage of trading using opposite Pakistan Refinery and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Refinery position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Pakistan Refinery vs. Habib Insurance | Pakistan Refinery vs. Ghandhara Automobile | Pakistan Refinery vs. Century Insurance | Pakistan Refinery vs. Reliance Weaving Mills |
| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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