Correlation Between Pakistan Telecommunicatio and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and Mari Petroleum 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 Mari Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and Mari Petroleum, you can compare the effects of market volatilities on Pakistan Telecommunicatio and Mari Petroleum 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 Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and Mari Petroleum.
Diversification Opportunities for Pakistan Telecommunicatio and Mari Petroleum
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Mari is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum 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 Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and Mari Petroleum go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and Mari Petroleum
Assuming the 90 days trading horizon Pakistan Telecommunication is expected to generate 0.95 times more return on investment than Mari Petroleum. However, Pakistan Telecommunication is 1.05 times less risky than Mari Petroleum. It trades about 0.22 of its potential returns per unit of risk. Mari Petroleum is currently generating about 0.11 per unit of risk. If you would invest 1,508 in Pakistan Telecommunication on October 30, 2024 and sell it today you would earn a total of 1,045 from holding Pakistan Telecommunication or generate 69.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Telecommunication vs. Mari Petroleum
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| Mari Petroleum |
Pakistan Telecommunicatio and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and Mari Petroleum
The main advantage of trading using opposite Pakistan Telecommunicatio and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, Mari Petroleum 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 Mari Petroleum will offset losses from the drop in Mari Petroleum's long position.| Pakistan Telecommunicatio vs. Askari Bank | Pakistan Telecommunicatio vs. EFU General Insurance | Pakistan Telecommunicatio vs. Pakistan Reinsurance | Pakistan Telecommunicatio vs. IGI Life Insurance |
| Mari Petroleum vs. Jubilee Life Insurance | Mari Petroleum vs. Pakistan Telecommunication | Mari Petroleum vs. EFU General Insurance | Mari Petroleum vs. Habib Insurance |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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