Correlation Between Hybrid Financial and Punjab National

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

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

Diversification Opportunities for Hybrid Financial and Punjab National

0.27

Correlation Coefficient

Hybrid Financial  Punjab National

Modest diversification

The 3 months correlation between Hybrid and Punjab is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hybrid Financial Services 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 Hybrid Financial 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 Hybrid Financial Services 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 Hybrid Financial i.e., Hybrid Financial and Punjab National go up and down completely randomly.

Pair Corralation between Hybrid Financial and Punjab National

Assuming the 90 days trading horizon Hybrid Financial Services is expected to generate 1.42 times more return on investment than Punjab National. However, Hybrid Financial is 1.42 times more volatile than Punjab National Bank. It trades about -0.03 of its potential returns per unit of risk. Punjab National Bank is currently generating about -0.14 per unit of risk. If you would invest  1,280  in Hybrid Financial Services on December 1, 2024 and sell it today you would lose (92.00) from holding Hybrid Financial Services or give up 7.19% of portfolio value over 90 days.

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

Hybrid Financial Services  vs.  Punjab National Bank

Hybrid Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hybrid Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hybrid Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hybrid Financial and Punjab National

The main advantage of trading using opposite Hybrid Financial and Punjab National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hybrid Financial 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 Hybrid Financial Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.