Correlation Between Pakistan State and Attock Petroleum
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Attock Petroleum 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 Attock Petroleum 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 Attock Petroleum, you can compare the effects of market volatilities on Pakistan State and Attock Petroleum 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 Attock Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Attock Petroleum.
Diversification Opportunities for Pakistan State and Attock Petroleum
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakistan and Attock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Attock Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Attock Petroleum 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 Attock Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Attock Petroleum has no effect on the direction of Pakistan State i.e., Pakistan State and Attock Petroleum go up and down completely randomly.
Pair Corralation between Pakistan State and Attock Petroleum
Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 1.47 times more return on investment than Attock Petroleum. However, Pakistan State is 1.47 times more volatile than Attock Petroleum. It trades about 0.33 of its potential returns per unit of risk. Attock Petroleum is currently generating about 0.39 per unit of risk. If you would invest 24,168 in Pakistan State Oil on September 4, 2024 and sell it today you would earn a total of 5,088 from holding Pakistan State Oil or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan State Oil vs. Attock Petroleum
Performance |
| Timeline |
| Pakistan State Oil |
| Attock Petroleum |
Pakistan State and Attock Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Attock Petroleum
The main advantage of trading using opposite Pakistan State and Attock Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Attock Petroleum 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 Attock Petroleum will offset losses from the drop in Attock Petroleum's long position.| Pakistan State vs. Masood Textile Mills | Pakistan State vs. Fauji Foods | Pakistan State vs. KSB Pumps | Pakistan State vs. Mari Petroleum |
| Attock Petroleum vs. Wah Nobel Chemicals | Attock Petroleum vs. Data Agro | Attock Petroleum vs. Ittehad Chemicals | Attock Petroleum vs. Metropolitan Steel Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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