Correlation Between Shell Pakistan and Nestle Pakistan
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By analyzing existing cross correlation between Shell Pakistan and Nestle Pakistan, you can compare the effects of market volatilities on Shell Pakistan and Nestle Pakistan 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 Shell Pakistan with a short position of Nestle Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell Pakistan and Nestle Pakistan.
Diversification Opportunities for Shell Pakistan and Nestle Pakistan
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shell and Nestle is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shell Pakistan and Nestle Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle Pakistan and Shell Pakistan 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 Shell Pakistan are associated (or correlated) with Nestle Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle Pakistan has no effect on the direction of Shell Pakistan i.e., Shell Pakistan and Nestle Pakistan go up and down completely randomly.
Pair Corralation between Shell Pakistan and Nestle Pakistan
Assuming the 90 days trading horizon Shell Pakistan is expected to generate 2.49 times more return on investment than Nestle Pakistan. However, Shell Pakistan is 2.49 times more volatile than Nestle Pakistan. It trades about 0.29 of its potential returns per unit of risk. Nestle Pakistan is currently generating about -0.04 per unit of risk. If you would invest 14,400 in Shell Pakistan on August 31, 2024 and sell it today you would earn a total of 1,657 from holding Shell Pakistan or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shell Pakistan vs. Nestle Pakistan
Performance |
| Timeline |
| Shell Pakistan |
| Nestle Pakistan |
Shell Pakistan and Nestle Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shell Pakistan and Nestle Pakistan
The main advantage of trading using opposite Shell Pakistan and Nestle Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell Pakistan position performs unexpectedly, Nestle Pakistan 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 Nestle Pakistan will offset losses from the drop in Nestle Pakistan's long position.| Shell Pakistan vs. National Bank of | Shell Pakistan vs. United Bank | Shell Pakistan vs. Bank Alfalah | Shell Pakistan vs. Allied Bank |
| Nestle Pakistan vs. Quice Food Industries | Nestle Pakistan vs. Agha Steel Industries | Nestle Pakistan vs. National Foods | Nestle Pakistan vs. Pakistan Aluminium Beverage |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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