Correlation Between Security Investment and Pak Gulf
Can any of the company-specific risk be diversified away by investing in both Security Investment and Pak Gulf 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 Security Investment and Pak Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Investment Bank and Pak Gulf Leasing, you can compare the effects of market volatilities on Security Investment and Pak Gulf 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 Security Investment with a short position of Pak Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Investment and Pak Gulf.
Diversification Opportunities for Security Investment and Pak Gulf
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Security and Pak is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Security Investment Bank and Pak Gulf Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Gulf Leasing and Security Investment 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 Security Investment Bank are associated (or correlated) with Pak Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Gulf Leasing has no effect on the direction of Security Investment i.e., Security Investment and Pak Gulf go up and down completely randomly.
Pair Corralation between Security Investment and Pak Gulf
Assuming the 90 days trading horizon Security Investment Bank is expected to under-perform the Pak Gulf. But the stock apears to be less risky and, when comparing its historical volatility, Security Investment Bank is 1.74 times less risky than Pak Gulf. The stock trades about -0.28 of its potential returns per unit of risk. The Pak Gulf Leasing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,931 in Pak Gulf Leasing on November 28, 2024 and sell it today you would earn a total of 169.00 from holding Pak Gulf Leasing or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Security Investment Bank vs. Pak Gulf Leasing
Performance |
| Timeline |
| Security Investment Bank |
| Pak Gulf Leasing |
Security Investment and Pak Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Investment and Pak Gulf
The main advantage of trading using opposite Security Investment and Pak Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Investment position performs unexpectedly, Pak Gulf 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 Pak Gulf will offset losses from the drop in Pak Gulf's long position.| Security Investment vs. Masood Textile Mills | Security Investment vs. Fauji Foods | Security Investment vs. KSB Pumps | Security Investment vs. Mari Petroleum |
| Pak Gulf vs. Masood Textile Mills | Pak Gulf vs. Fauji Foods | Pak Gulf vs. KSB Pumps | Pak Gulf vs. Mari Petroleum |
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 Stocks Directory module to find actively traded stocks across global markets.
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