Correlation Between Pakistan Telecommunicatio and International Steels
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and International Steels 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 International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and International Steels, you can compare the effects of market volatilities on Pakistan Telecommunicatio and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and International Steels.
Diversification Opportunities for Pakistan Telecommunicatio and International Steels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakistan and International is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and International Steels go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and International Steels
Assuming the 90 days trading horizon Pakistan Telecommunication is expected to generate 1.58 times more return on investment than International Steels. However, Pakistan Telecommunicatio is 1.58 times more volatile than International Steels. It trades about 0.1 of its potential returns per unit of risk. International Steels is currently generating about 0.05 per unit of risk. If you would invest 1,007 in Pakistan Telecommunication on November 8, 2024 and sell it today you would earn a total of 1,244 from holding Pakistan Telecommunication or generate 123.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Telecommunication vs. International Steels
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| International Steels |
Pakistan Telecommunicatio and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and International Steels
The main advantage of trading using opposite Pakistan Telecommunicatio and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| Pakistan Telecommunicatio vs. Jubilee Life Insurance | Pakistan Telecommunicatio vs. MCB Bank | Pakistan Telecommunicatio vs. National Bank of | Pakistan Telecommunicatio vs. JS Bank |
| International Steels vs. Big Bird Foods | International Steels vs. Matco Foods | International Steels vs. Fauji Foods | International Steels vs. JS Bank |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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