Correlation Between Taj GVK and Punjab Sind

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Can any of the company-specific risk be diversified away by investing in both Taj GVK and Punjab Sind 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 Taj GVK and Punjab Sind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taj GVK Hotels and Punjab Sind Bank, you can compare the effects of market volatilities on Taj GVK and Punjab Sind 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 Taj GVK with a short position of Punjab Sind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taj GVK and Punjab Sind.

Diversification Opportunities for Taj GVK and Punjab Sind

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Taj and Punjab is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank and Taj GVK 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 Taj GVK Hotels are associated (or correlated) with Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Taj GVK i.e., Taj GVK and Punjab Sind go up and down completely randomly.

Pair Corralation between Taj GVK and Punjab Sind

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 0.86 times more return on investment than Punjab Sind. However, Taj GVK Hotels is 1.17 times less risky than Punjab Sind. It trades about 0.16 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.08 per unit of risk. If you would invest  33,470  in Taj GVK Hotels on September 12, 2024 and sell it today you would earn a total of  2,485  from holding Taj GVK Hotels or generate 7.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Taj GVK Hotels  vs.  Punjab Sind Bank

 Performance 
       Timeline  
Taj GVK Hotels 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Taj GVK may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Punjab Sind Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Punjab Sind is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Taj GVK and Punjab Sind Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Taj GVK and Punjab Sind

The main advantage of trading using opposite Taj GVK and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taj GVK position performs unexpectedly, Punjab Sind 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 Punjab Sind will offset losses from the drop in Punjab Sind's long position.
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The idea behind Taj GVK Hotels and Punjab Sind Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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