Correlation Between Pakistan Synthetics and Loads
Can any of the company-specific risk be diversified away by investing in both Pakistan Synthetics and Loads 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 Loads into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Synthetics and Loads, you can compare the effects of market volatilities on Pakistan Synthetics and Loads 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 Loads. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Synthetics and Loads.
Diversification Opportunities for Pakistan Synthetics and Loads
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pakistan and Loads is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Synthetics and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads 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 Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of Pakistan Synthetics i.e., Pakistan Synthetics and Loads go up and down completely randomly.
Pair Corralation between Pakistan Synthetics and Loads
Assuming the 90 days trading horizon Pakistan Synthetics is expected to generate 2.3 times less return on investment than Loads. But when comparing it to its historical volatility, Pakistan Synthetics is 1.39 times less risky than Loads. It trades about 0.23 of its potential returns per unit of risk. Loads is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 985.00 in Loads on September 1, 2024 and sell it today you would earn a total of 376.00 from holding Loads or generate 38.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Synthetics vs. Loads
Performance |
| Timeline |
| Pakistan Synthetics |
| Loads |
Pakistan Synthetics and Loads Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Synthetics and Loads
The main advantage of trading using opposite Pakistan Synthetics and Loads positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Synthetics position performs unexpectedly, Loads 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 Loads will offset losses from the drop in Loads' long position.| Pakistan Synthetics vs. Masood Textile Mills | Pakistan Synthetics vs. Fauji Foods | Pakistan Synthetics vs. KSB Pumps | Pakistan Synthetics vs. Mari Petroleum |
| Loads vs. Khyber Tobacco | Loads vs. Sitara Chemical Industries | Loads vs. Unilever Pakistan Foods | Loads vs. ORIX Leasing Pakistan |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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