Correlation Between Pakistan Telecommunicatio and National Refinery
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and National Refinery 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 National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and National Refinery, you can compare the effects of market volatilities on Pakistan Telecommunicatio and National Refinery 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 National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and National Refinery.
Diversification Opportunities for Pakistan Telecommunicatio and National Refinery
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and National is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery 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 National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and National Refinery go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and National Refinery
Assuming the 90 days trading horizon Pakistan Telecommunication is expected to generate 1.22 times more return on investment than National Refinery. However, Pakistan Telecommunicatio is 1.22 times more volatile than National Refinery. It trades about 0.09 of its potential returns per unit of risk. National Refinery is currently generating about 0.03 per unit of risk. If you would invest 650.00 in Pakistan Telecommunication on September 2, 2024 and sell it today you would earn a total of 1,384 from holding Pakistan Telecommunication or generate 212.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Telecommunication vs. National Refinery
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| National Refinery |
Pakistan Telecommunicatio and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and National Refinery
The main advantage of trading using opposite Pakistan Telecommunicatio and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| Pakistan Telecommunicatio vs. Habib Bank | Pakistan Telecommunicatio vs. National Bank of | Pakistan Telecommunicatio vs. United Bank | Pakistan Telecommunicatio vs. MCB Bank |
| National Refinery vs. Security Investment Bank | National Refinery vs. TPL Insurance | National Refinery vs. Pakistan Telecommunication | National Refinery vs. JS Investments |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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