Correlation Between Pakistan State and Ghani Glass
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Ghani Glass 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 Ghani Glass 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 Ghani Glass, you can compare the effects of market volatilities on Pakistan State and Ghani Glass 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 Ghani Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Ghani Glass.
Diversification Opportunities for Pakistan State and Ghani Glass
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Ghani is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Ghani Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Glass 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 Ghani Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Glass has no effect on the direction of Pakistan State i.e., Pakistan State and Ghani Glass go up and down completely randomly.
Pair Corralation between Pakistan State and Ghani Glass
Assuming the 90 days trading horizon Pakistan State is expected to generate 1.07 times less return on investment than Ghani Glass. But when comparing it to its historical volatility, Pakistan State Oil is 1.41 times less risky than Ghani Glass. It trades about 0.36 of its potential returns per unit of risk. Ghani Glass is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,536 in Ghani Glass on September 12, 2024 and sell it today you would earn a total of 637.00 from holding Ghani Glass or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan State Oil vs. Ghani Glass
Performance |
| Timeline |
| Pakistan State Oil |
| Ghani Glass |
Pakistan State and Ghani Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Ghani Glass
The main advantage of trading using opposite Pakistan State and Ghani Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Ghani Glass 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 Ghani Glass will offset losses from the drop in Ghani Glass' long position.| Pakistan State vs. JS Global Banking | Pakistan State vs. Pakistan Hotel Developers | Pakistan State vs. Engro Polymer Chemicals | Pakistan State vs. Air Link Communication |
| Ghani Glass vs. TPL Insurance | Ghani Glass vs. Avanceon | Ghani Glass vs. National Bank of | Ghani Glass vs. IBL HealthCare |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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