Correlation Between Punjab Sind and HMT
Can any of the company-specific risk be diversified away by investing in both Punjab Sind and HMT 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 Punjab Sind and HMT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Punjab Sind Bank and HMT Limited, you can compare the effects of market volatilities on Punjab Sind and HMT 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 Punjab Sind with a short position of HMT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab Sind and HMT.
Diversification Opportunities for Punjab Sind and HMT
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Punjab and HMT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and HMT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMT Limited and Punjab Sind 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 Punjab Sind Bank are associated (or correlated) with HMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMT Limited has no effect on the direction of Punjab Sind i.e., Punjab Sind and HMT go up and down completely randomly.
Pair Corralation between Punjab Sind and HMT
Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 0.89 times more return on investment than HMT. However, Punjab Sind Bank is 1.12 times less risky than HMT. It trades about -0.29 of its potential returns per unit of risk. HMT Limited is currently generating about -0.39 per unit of risk. If you would invest 4,711 in Punjab Sind Bank on December 1, 2024 and sell it today you would lose (687.00) from holding Punjab Sind Bank or give up 14.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Punjab Sind Bank vs. HMT Limited
Performance |
| Timeline |
| Punjab Sind Bank |
| HMT Limited |
Punjab Sind and HMT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Punjab Sind and HMT
The main advantage of trading using opposite Punjab Sind and HMT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab Sind position performs unexpectedly, HMT 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 HMT will offset losses from the drop in HMT's long position.| Punjab Sind vs. Heritage Foods Limited | Punjab Sind vs. Univa Foods Limited | Punjab Sind vs. Future Retail Limited | Punjab Sind vs. Golden Tobacco Limited |
| HMT vs. Osia Hyper Retail | HMT vs. LLOYDS METALS AND | HMT vs. MIRC Electronics Limited | HMT vs. Baazar Style Retail |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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