Correlation Between Emkay Global and Punjab National

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

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

Diversification Opportunities for Emkay Global and Punjab National

0.77

Correlation Coefficient

Emkay Global  Punjab National

Poor diversification

The 3 months correlation between Emkay and Punjab is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Emkay Global Financial 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 Emkay Global 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 Emkay Global Financial 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 Emkay Global i.e., Emkay Global and Punjab National go up and down completely randomly.

Pair Corralation between Emkay Global and Punjab National

Assuming the 90 days trading horizon Emkay Global Financial is expected to under-perform the Punjab National. In addition to that, Emkay Global is 1.63 times more volatile than Punjab National Bank. It trades about -0.23 of its total potential returns per unit of risk. Punjab National Bank is currently generating about -0.06 per unit of volatility. If you would invest  10,138  in Punjab National Bank on December 22, 2024 and sell it today you would lose (824.00) from holding Punjab National Bank or give up 8.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Emkay Global Financial  vs.  Punjab National Bank

Emkay Global Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emkay Global Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Punjab National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Punjab National Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Emkay Global and Punjab National

The main advantage of trading using opposite Emkay Global and Punjab National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emkay Global 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 Emkay Global Financial 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.