Correlation Between JS Investments and Pakistan Refinery

Can any of the company-specific risk be diversified away by investing in both JS Investments and Pakistan Refinery 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 JS Investments and Pakistan Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JS Investments and Pakistan Refinery, you can compare the effects of market volatilities on JS Investments and Pakistan Refinery 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 JS Investments with a short position of Pakistan Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Pakistan Refinery.

Diversification Opportunities for JS Investments and Pakistan Refinery

0.54

Correlation Coefficient

JS Investments  Pakistan Refinery

Very weak diversification

The 3 months correlation between JSIL and Pakistan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Pakistan Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Refinery and JS Investments 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 JS Investments are associated (or correlated) with Pakistan Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Refinery has no effect on the direction of JS Investments i.e., JS Investments and Pakistan Refinery go up and down completely randomly.

Pair Corralation between JS Investments and Pakistan Refinery

Assuming the 90 days trading horizon JS Investments is expected to generate 0.97 times more return on investment than Pakistan Refinery. However, JS Investments is 1.03 times less risky than Pakistan Refinery. It trades about -0.02 of its potential returns per unit of risk. Pakistan Refinery is currently generating about -0.03 per unit of risk. If you would invest  2,371  in JS Investments on December 30, 2024 and sell it today you would lose (170.00) from holding JS Investments or give up 7.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

JS Investments  vs.  Pakistan Refinery

JS Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JS Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pakistan Refinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pakistan Refinery has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pakistan Refinery is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JS Investments and Pakistan Refinery

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

The idea behind JS Investments and Pakistan Refinery 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.