Correlation Between Pakistan Services and Shaheen Insurance
Can any of the company-specific risk be diversified away by investing in both Pakistan Services and Shaheen Insurance 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 Services and Shaheen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Services Limited and Shaheen Insurance, you can compare the effects of market volatilities on Pakistan Services and Shaheen Insurance 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 Services with a short position of Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Services and Shaheen Insurance.
Diversification Opportunities for Pakistan Services and Shaheen Insurance
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Shaheen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Services Limited and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and Pakistan Services 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 Services Limited are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Pakistan Services i.e., Pakistan Services and Shaheen Insurance go up and down completely randomly.
Pair Corralation between Pakistan Services and Shaheen Insurance
Assuming the 90 days trading horizon Pakistan Services Limited is expected to under-perform the Shaheen Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Services Limited is 1.2 times less risky than Shaheen Insurance. The stock trades about -0.03 of its potential returns per unit of risk. The Shaheen Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 299.00 in Shaheen Insurance on September 14, 2024 and sell it today you would earn a total of 310.00 from holding Shaheen Insurance or generate 103.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.17% |
| Values | Daily Returns |
Pakistan Services Limited vs. Shaheen Insurance
Performance |
| Timeline |
| Pakistan Services |
| Shaheen Insurance |
Pakistan Services and Shaheen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Services and Shaheen Insurance
The main advantage of trading using opposite Pakistan Services and Shaheen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Services position performs unexpectedly, Shaheen Insurance 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 Shaheen Insurance will offset losses from the drop in Shaheen Insurance's long position.| Pakistan Services vs. Shaheen Insurance | Pakistan Services vs. Askari Bank | Pakistan Services vs. Atlas Insurance | Pakistan Services vs. ITTEFAQ Iron Industries |
| Shaheen Insurance vs. Masood Textile Mills | Shaheen Insurance vs. Fauji Foods | Shaheen Insurance vs. KSB Pumps | Shaheen Insurance vs. Mari Petroleum |
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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