Correlation Between Pakistan Synthetics and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Pakistan Synthetics and Grays Leasing 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 Synthetics and Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Synthetics and Grays Leasing, you can compare the effects of market volatilities on Pakistan Synthetics and Grays Leasing 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 Synthetics with a short position of Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Synthetics and Grays Leasing.
Diversification Opportunities for Pakistan Synthetics and Grays Leasing
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Grays is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Synthetics and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing and Pakistan Synthetics 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 Synthetics are associated (or correlated) with Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Pakistan Synthetics i.e., Pakistan Synthetics and Grays Leasing go up and down completely randomly.
Pair Corralation between Pakistan Synthetics and Grays Leasing
Assuming the 90 days trading horizon Pakistan Synthetics is expected to generate 0.76 times more return on investment than Grays Leasing. However, Pakistan Synthetics is 1.32 times less risky than Grays Leasing. It trades about 0.0 of its potential returns per unit of risk. Grays Leasing is currently generating about -0.16 per unit of risk. If you would invest 4,000 in Pakistan Synthetics on November 8, 2024 and sell it today you would lose (56.00) from holding Pakistan Synthetics or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Pakistan Synthetics vs. Grays Leasing
Performance |
| Timeline |
| Pakistan Synthetics |
| Grays Leasing |
Pakistan Synthetics and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Synthetics and Grays Leasing
The main advantage of trading using opposite Pakistan Synthetics and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Synthetics position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| Pakistan Synthetics vs. Sardar Chemical Industries | Pakistan Synthetics vs. Sitara Chemical Industries | Pakistan Synthetics vs. Lotte Chemical Pakistan | Pakistan Synthetics vs. Ghani Chemical Industries |
| Grays Leasing vs. Ittehad Chemicals | Grays Leasing vs. ITTEFAQ Iron Industries | Grays Leasing vs. Beco Steel | Grays Leasing vs. Metropolitan Steel Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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