Correlation Between ORIX Leasing and Pakistan Cables
Can any of the company-specific risk be diversified away by investing in both ORIX Leasing and Pakistan Cables 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 ORIX Leasing and Pakistan Cables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORIX Leasing Pakistan and Pakistan Cables, you can compare the effects of market volatilities on ORIX Leasing and Pakistan Cables 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 ORIX Leasing with a short position of Pakistan Cables. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX Leasing and Pakistan Cables.
Diversification Opportunities for ORIX Leasing and Pakistan Cables
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ORIX and Pakistan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Leasing Pakistan and Pakistan Cables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Cables and ORIX Leasing 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 ORIX Leasing Pakistan are associated (or correlated) with Pakistan Cables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Cables has no effect on the direction of ORIX Leasing i.e., ORIX Leasing and Pakistan Cables go up and down completely randomly.
Pair Corralation between ORIX Leasing and Pakistan Cables
Assuming the 90 days trading horizon ORIX Leasing is expected to generate 2.67 times less return on investment than Pakistan Cables. But when comparing it to its historical volatility, ORIX Leasing Pakistan is 2.0 times less risky than Pakistan Cables. It trades about 0.13 of its potential returns per unit of risk. Pakistan Cables is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 15,006 in Pakistan Cables on October 8, 2024 and sell it today you would earn a total of 2,405 from holding Pakistan Cables or generate 16.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ORIX Leasing Pakistan vs. Pakistan Cables
Performance |
Timeline |
ORIX Leasing Pakistan |
Pakistan Cables |
ORIX Leasing and Pakistan Cables Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ORIX Leasing and Pakistan Cables
The main advantage of trading using opposite ORIX Leasing and Pakistan Cables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORIX Leasing position performs unexpectedly, Pakistan Cables 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 Cables will offset losses from the drop in Pakistan Cables' long position.ORIX Leasing vs. Masood Textile Mills | ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. KSB Pumps | ORIX Leasing vs. Mari Petroleum |
Pakistan Cables vs. Silkbank | Pakistan Cables vs. Habib Insurance | Pakistan Cables vs. MCB Bank | Pakistan Cables vs. Pakistan Tobacco |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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