Correlation Between Pakistan Telecommunicatio and JS Investments
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and JS Investments 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 JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and JS Investments, you can compare the effects of market volatilities on Pakistan Telecommunicatio and JS Investments 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 JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and JS Investments.
Diversification Opportunities for Pakistan Telecommunicatio and JS Investments
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and JSIL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and JS Investments go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and JS Investments
Assuming the 90 days trading horizon Pakistan Telecommunicatio is expected to generate 1.6 times less return on investment than JS Investments. But when comparing it to its historical volatility, Pakistan Telecommunication is 1.07 times less risky than JS Investments. It trades about 0.09 of its potential returns per unit of risk. JS Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,553 in JS Investments on September 3, 2024 and sell it today you would earn a total of 1,004 from holding JS Investments or generate 64.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.22% |
| Values | Daily Returns |
Pakistan Telecommunication vs. JS Investments
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| JS Investments |
Pakistan Telecommunicatio and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and JS Investments
The main advantage of trading using opposite Pakistan Telecommunicatio and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Pakistan Telecommunicatio vs. Masood Textile Mills | Pakistan Telecommunicatio vs. Fauji Foods | Pakistan Telecommunicatio vs. KSB Pumps | Pakistan Telecommunicatio vs. Mari Petroleum |
| JS Investments vs. Meezan Bank | JS Investments vs. Reliance Insurance Co | JS Investments vs. Faysal Bank | JS Investments vs. Packages |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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