Correlation Between Thatta Cement and Pakistan Reinsurance
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and Pakistan Reinsurance 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 Thatta Cement and Pakistan Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and Pakistan Reinsurance, you can compare the effects of market volatilities on Thatta Cement and Pakistan Reinsurance 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 Thatta Cement with a short position of Pakistan Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and Pakistan Reinsurance.
Diversification Opportunities for Thatta Cement and Pakistan Reinsurance
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thatta and Pakistan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and Pakistan Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Reinsurance and Thatta Cement 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 Thatta Cement are associated (or correlated) with Pakistan Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Reinsurance has no effect on the direction of Thatta Cement i.e., Thatta Cement and Pakistan Reinsurance go up and down completely randomly.
Pair Corralation between Thatta Cement and Pakistan Reinsurance
Assuming the 90 days trading horizon Thatta Cement is expected to generate 1.17 times more return on investment than Pakistan Reinsurance. However, Thatta Cement is 1.17 times more volatile than Pakistan Reinsurance. It trades about 0.2 of its potential returns per unit of risk. Pakistan Reinsurance is currently generating about 0.08 per unit of risk. If you would invest 1,139 in Thatta Cement on October 13, 2024 and sell it today you would earn a total of 19,636 from holding Thatta Cement or generate 1723.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.55% |
| Values | Daily Returns |
Thatta Cement vs. Pakistan Reinsurance
Performance |
| Timeline |
| Thatta Cement |
| Pakistan Reinsurance |
Thatta Cement and Pakistan Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and Pakistan Reinsurance
The main advantage of trading using opposite Thatta Cement and Pakistan Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, Pakistan Reinsurance 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 Reinsurance will offset losses from the drop in Pakistan Reinsurance's long position.| Thatta Cement vs. Shifa International Hospitals | Thatta Cement vs. Hi Tech Lubricants | Thatta Cement vs. Avanceon | Thatta Cement vs. Roshan Packages |
| Pakistan Reinsurance vs. Hi Tech Lubricants | Pakistan Reinsurance vs. Universal Insurance | Pakistan Reinsurance vs. Allied Bank | Pakistan Reinsurance vs. JS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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