Correlation Between Aarey Drugs and Punjab National

Can any of the company-specific risk be diversified away by investing in both Aarey Drugs and Punjab National 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 Aarey Drugs and Punjab National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aarey Drugs Pharmaceuticals and Punjab National Bank, you can compare the effects of market volatilities on Aarey Drugs and Punjab National 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 Aarey Drugs with a short position of Punjab National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarey Drugs and Punjab National.

Diversification Opportunities for Aarey Drugs and Punjab National

0.51

Correlation Coefficient

Aarey Drugs  Punjab National

Very weak diversification

The 3 months correlation between Aarey and Punjab is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aarey Drugs Pharmaceuticals and Punjab National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab National Bank and Aarey Drugs 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 Aarey Drugs Pharmaceuticals are associated (or correlated) with Punjab National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab National Bank has no effect on the direction of Aarey Drugs i.e., Aarey Drugs and Punjab National go up and down completely randomly.

Pair Corralation between Aarey Drugs and Punjab National

Assuming the 90 days trading horizon Aarey Drugs Pharmaceuticals is expected to under-perform the Punjab National. But the stock apears to be less risky and, when comparing its historical volatility, Aarey Drugs Pharmaceuticals is 1.05 times less risky than Punjab National. The stock trades about -0.37 of its potential returns per unit of risk. The Punjab National Bank is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,138  in Punjab National Bank on October 22, 2024 and sell it today you would lose (125.00) from holding Punjab National Bank or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Aarey Drugs Pharmaceuticals  vs.  Punjab National Bank

Aarey Drugs Pharmace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aarey Drugs Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Punjab National Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Punjab National Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Punjab National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aarey Drugs and Punjab National

The main advantage of trading using opposite Aarey Drugs and Punjab National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarey Drugs position performs unexpectedly, Punjab National 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 National will offset losses from the drop in Punjab National's long position.

The idea behind Aarey Drugs Pharmaceuticals and Punjab National 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.