Correlation Between Pakistan State and Shifa International
Can any of the company-specific risk be diversified away by investing in both Pakistan State and Shifa International 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 Shifa International 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 Shifa International Hospitals, you can compare the effects of market volatilities on Pakistan State and Shifa International 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 Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Shifa International.
Diversification Opportunities for Pakistan State and Shifa International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pakistan and Shifa is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International 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 Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Pakistan State i.e., Pakistan State and Shifa International go up and down completely randomly.
Pair Corralation between Pakistan State and Shifa International
Assuming the 90 days trading horizon Pakistan State is expected to generate 1.21 times less return on investment than Shifa International. But when comparing it to its historical volatility, Pakistan State Oil is 1.07 times less risky than Shifa International. It trades about 0.11 of its potential returns per unit of risk. Shifa International Hospitals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,621 in Shifa International Hospitals on November 2, 2024 and sell it today you would earn a total of 31,779 from holding Shifa International Hospitals or generate 273.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.27% |
| Values | Daily Returns |
Pakistan State Oil vs. Shifa International Hospitals
Performance |
| Timeline |
| Pakistan State Oil |
| Shifa International |
Pakistan State and Shifa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Shifa International
The main advantage of trading using opposite Pakistan State and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.| Pakistan State vs. Aisha Steel Mills | Pakistan State vs. Amreli Steels | Pakistan State vs. 786 Investment Limited | Pakistan State vs. Oil and Gas |
| Shifa International vs. Engro Polymer Chemicals | Shifa International vs. Nimir Industrial Chemical | Shifa International vs. Wah Nobel Chemicals | Shifa International vs. Air Link Communication |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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