Correlation Between Pakistan State and Askari General
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Askari General 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 State and Askari General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan State Oil and Askari General Insurance, you can compare the effects of market volatilities on Pakistan State and Askari General 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 State with a short position of Askari General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Askari General.
Diversification Opportunities for Pakistan State and Askari General
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Askari is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Pakistan State 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 State Oil are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Pakistan State i.e., Pakistan State and Askari General go up and down completely randomly.
Pair Corralation between Pakistan State and Askari General
Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 1.59 times more return on investment than Askari General. However, Pakistan State is 1.59 times more volatile than Askari General Insurance. It trades about 0.37 of its potential returns per unit of risk. Askari General Insurance is currently generating about 0.12 per unit of risk. If you would invest 24,168 in Pakistan State Oil on September 5, 2024 and sell it today you would earn a total of 6,039 from holding Pakistan State Oil or generate 24.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan State Oil vs. Askari General Insurance
Performance |
| Timeline |
| Pakistan State Oil |
| Askari General Insurance |
Pakistan State and Askari General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Askari General
The main advantage of trading using opposite Pakistan State and Askari General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Askari General 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 Askari General will offset losses from the drop in Askari General's long position.| Pakistan State vs. Masood Textile Mills | Pakistan State vs. Fauji Foods | Pakistan State vs. KSB Pumps | Pakistan State vs. Mari Petroleum |
| Askari General vs. Oil and Gas | Askari General vs. Pakistan State Oil | Askari General vs. Pakistan Petroleum | Askari General 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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