Correlation Between Roshan Packages and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Roshan Packages and Pakistan Telecommunicatio 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 Roshan Packages and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roshan Packages and Pakistan Telecommunication, you can compare the effects of market volatilities on Roshan Packages and Pakistan Telecommunicatio 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 Roshan Packages with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roshan Packages and Pakistan Telecommunicatio.
Diversification Opportunities for Roshan Packages and Pakistan Telecommunicatio
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Roshan and Pakistan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Roshan Packages and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and Roshan Packages 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 Roshan Packages are associated (or correlated) with Pakistan Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Roshan Packages i.e., Roshan Packages and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Roshan Packages and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Roshan Packages is expected to generate 1.07 times more return on investment than Pakistan Telecommunicatio. However, Roshan Packages is 1.07 times more volatile than Pakistan Telecommunication. It trades about -0.08 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about -0.28 per unit of risk. If you would invest 1,888 in Roshan Packages on October 24, 2024 and sell it today you would lose (83.00) from holding Roshan Packages or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roshan Packages vs. Pakistan Telecommunication
Performance |
| Timeline |
| Roshan Packages |
| Pakistan Telecommunicatio |
Roshan Packages and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roshan Packages and Pakistan Telecommunicatio
The main advantage of trading using opposite Roshan Packages and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roshan Packages position performs unexpectedly, Pakistan Telecommunicatio 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 Pakistan Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| Roshan Packages vs. Lotte Chemical Pakistan | Roshan Packages vs. Nimir Industrial Chemical | Roshan Packages vs. JS Bank | Roshan Packages vs. Askari 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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