Correlation Between Garuda Construction and Punjab Sind

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

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

Diversification Opportunities for Garuda Construction and Punjab Sind

0.25

Correlation Coefficient

Garuda Construction  Punjab Sind

Modest diversification

The 3 months correlation between Garuda and Punjab is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin 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 Garuda Construction 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 Garuda Construction Engineering 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 Garuda Construction i.e., Garuda Construction and Punjab Sind go up and down completely randomly.

Pair Corralation between Garuda Construction and Punjab Sind

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 1.41 times more return on investment than Punjab Sind. However, Garuda Construction is 1.41 times more volatile than Punjab Sind Bank. It trades about 0.1 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.03 per unit of risk. If you would invest  10,636  in Garuda Construction Engineering on October 5, 2024 and sell it today you would earn a total of  2,500  from holding Garuda Construction Engineering or generate 23.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	22.63%
Values	Daily Returns

Garuda Construction Engineerin  vs.  Punjab Sind Bank

Garuda Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Garuda Construction and Punjab Sind

The main advantage of trading using opposite Garuda Construction and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Construction 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.

The idea behind Garuda Construction Engineering 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.