Correlation Between National Bank and Sindh Modaraba

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

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

Diversification Opportunities for National Bank and Sindh Modaraba

0.52

Correlation Coefficient

National Bank  Sindh Modaraba

Very weak diversification

The 3 months correlation between National and Sindh is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Sindh Modaraba Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sindh Modaraba Management and National Bank 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 National Bank of are associated (or correlated) with Sindh Modaraba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sindh Modaraba Management has no effect on the direction of National Bank i.e., National Bank and Sindh Modaraba go up and down completely randomly.

Pair Corralation between National Bank and Sindh Modaraba

Assuming the 90 days trading horizon National Bank of is expected to under-perform the Sindh Modaraba. In addition to that, National Bank is 1.91 times more volatile than Sindh Modaraba Management. It trades about -0.01 of its total potential returns per unit of risk. Sindh Modaraba Management is currently generating about -0.01 per unit of volatility. If you would invest  1,000.00  in Sindh Modaraba Management on September 23, 2024 and sell it today you would lose (10.00) from holding Sindh Modaraba Management or give up 1.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

National Bank of  vs.  Sindh Modaraba Management

National Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sindh Modaraba Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sindh Modaraba Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sindh Modaraba is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with National Bank and Sindh Modaraba

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

The idea behind National Bank of and Sindh Modaraba Management 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.