Correlation Between Shifa International and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Shifa International 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 Shifa International and Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shifa International Hospitals and Pakistan Telecommunication, you can compare the effects of market volatilities on Shifa International 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 Shifa International with a short position of Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and Pakistan Telecommunicatio.
Diversification Opportunities for Shifa International and Pakistan Telecommunicatio
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shifa and Pakistan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio and Shifa International 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 Shifa International Hospitals 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 Shifa International i.e., Shifa International and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Shifa International and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Shifa International is expected to generate 6.7 times less return on investment than Pakistan Telecommunicatio. But when comparing it to its historical volatility, Shifa International Hospitals is 1.57 times less risky than Pakistan Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 1,609 in Pakistan Telecommunication on September 12, 2024 and sell it today you would earn a total of 918.00 from holding Pakistan Telecommunication or generate 57.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shifa International Hospitals vs. Pakistan Telecommunication
Performance |
| Timeline |
| Shifa International |
| Pakistan Telecommunicatio |
Shifa International and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and Pakistan Telecommunicatio
The main advantage of trading using opposite Shifa International and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International 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.| Shifa International vs. Oil and Gas | Shifa International vs. Pakistan State Oil | Shifa International vs. Pakistan Petroleum | Shifa International vs. Fauji Fertilizer |
| Pakistan Telecommunicatio vs. Oil and Gas | Pakistan Telecommunicatio vs. Pakistan State Oil | Pakistan Telecommunicatio vs. Pakistan Petroleum | Pakistan Telecommunicatio vs. Fauji Fertilizer |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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