Correlation Between Pakistan State and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Gatron Industries 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 Gatron Industries 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 Gatron Industries, you can compare the effects of market volatilities on Pakistan State and Gatron Industries 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 Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Gatron Industries.
Diversification Opportunities for Pakistan State and Gatron Industries
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pakistan and Gatron is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries 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 Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of Pakistan State i.e., Pakistan State and Gatron Industries go up and down completely randomly.
Pair Corralation between Pakistan State and Gatron Industries
Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 3.19 times more return on investment than Gatron Industries. However, Pakistan State is 3.19 times more volatile than Gatron Industries. It trades about 0.46 of its potential returns per unit of risk. Gatron Industries is currently generating about 0.09 per unit of risk. If you would invest 24,606 in Pakistan State Oil on September 14, 2024 and sell it today you would earn a total of 9,393 from holding Pakistan State Oil or generate 38.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan State Oil vs. Gatron Industries
Performance |
| Timeline |
| Pakistan State Oil |
| Gatron Industries |
Pakistan State and Gatron Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Gatron Industries
The main advantage of trading using opposite Pakistan State and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.| Pakistan State vs. Quice Food Industries | Pakistan State vs. Jubilee Life Insurance | Pakistan State vs. Invest Capital Investment | Pakistan State vs. Air Link Communication |
| Gatron Industries vs. Adamjee Insurance | Gatron Industries vs. The Organic Meat | Gatron Industries vs. Askari General Insurance | Gatron Industries vs. Reliance Insurance Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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