Correlation Between Pakistan State and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Roshan Packages 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 Roshan Packages 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 Roshan Packages, you can compare the effects of market volatilities on Pakistan State and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Roshan Packages.
Diversification Opportunities for Pakistan State and Roshan Packages
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Roshan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of Pakistan State i.e., Pakistan State and Roshan Packages go up and down completely randomly.
Pair Corralation between Pakistan State and Roshan Packages
Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 0.78 times more return on investment than Roshan Packages. However, Pakistan State Oil is 1.28 times less risky than Roshan Packages. It trades about 0.09 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.05 per unit of risk. If you would invest 19,079 in Pakistan State Oil on September 12, 2024 and sell it today you would earn a total of 10,788 from holding Pakistan State Oil or generate 56.54% 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. Roshan Packages
Performance |
| Timeline |
| Pakistan State Oil |
| Roshan Packages |
Pakistan State and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Roshan Packages
The main advantage of trading using opposite Pakistan State and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Roshan Packages 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 Roshan Packages will offset losses from the drop in Roshan Packages' 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 |
| Roshan Packages vs. Oil and Gas | Roshan Packages vs. Pakistan State Oil | Roshan Packages vs. Pakistan Petroleum | Roshan Packages 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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