Correlation Between Pakistan State and Masood Textile
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Masood Textile 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 Masood Textile 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 Masood Textile Mills, you can compare the effects of market volatilities on Pakistan State and Masood Textile 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 Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Masood Textile.
Diversification Opportunities for Pakistan State and Masood Textile
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pakistan and Masood is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills 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 Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of Pakistan State i.e., Pakistan State and Masood Textile go up and down completely randomly.
Pair Corralation between Pakistan State and Masood Textile
Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 0.61 times more return on investment than Masood Textile. However, Pakistan State Oil is 1.64 times less risky than Masood Textile. It trades about 0.25 of its potential returns per unit of risk. Masood Textile Mills is currently generating about 0.01 per unit of risk. If you would invest 15,467 in Pakistan State Oil on September 5, 2024 and sell it today you would earn a total of 14,740 from holding Pakistan State Oil or generate 95.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.31% |
| Values | Daily Returns |
Pakistan State Oil vs. Masood Textile Mills
Performance |
| Timeline |
| Pakistan State Oil |
| Masood Textile Mills |
Pakistan State and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Masood Textile
The main advantage of trading using opposite Pakistan State and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Masood Textile 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 Masood Textile will offset losses from the drop in Masood Textile's long position.| Pakistan State vs. Masood Textile Mills | Pakistan State vs. Fauji Foods | Pakistan State vs. KSB Pumps | Pakistan State vs. Mari Petroleum |
| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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