Correlation Between Pakistan Telecommunicatio and East West
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and East West 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 Telecommunicatio and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and East West Insurance, you can compare the effects of market volatilities on Pakistan Telecommunicatio and East West 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 Telecommunicatio with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and East West.
Diversification Opportunities for Pakistan Telecommunicatio and East West
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pakistan and East is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Insurance and Pakistan Telecommunicatio 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 Telecommunication are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Insurance has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and East West go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and East West
Assuming the 90 days trading horizon Pakistan Telecommunication is expected to generate 1.3 times more return on investment than East West. However, Pakistan Telecommunicatio is 1.3 times more volatile than East West Insurance. It trades about 0.19 of its potential returns per unit of risk. East West Insurance is currently generating about -0.03 per unit of risk. If you would invest 1,239 in Pakistan Telecommunication on August 28, 2024 and sell it today you would earn a total of 542.00 from holding Pakistan Telecommunication or generate 43.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.84% |
| Values | Daily Returns |
Pakistan Telecommunication vs. East West Insurance
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| East West Insurance |
Pakistan Telecommunicatio and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and East West
The main advantage of trading using opposite Pakistan Telecommunicatio and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Pakistan Telecommunicatio vs. Masood Textile Mills | Pakistan Telecommunicatio vs. Fauji Foods | Pakistan Telecommunicatio vs. KSB Pumps | Pakistan Telecommunicatio vs. Mari Petroleum |
| East West vs. Habib Insurance | East West vs. Century Insurance | East West vs. Reliance Weaving Mills | East West vs. Media Times |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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