Correlation Between Pak Gulf and Security Investment

Can any of the company-specific risk be diversified away by investing in both Pak Gulf and Security Investment 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 Pak Gulf and Security Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pak Gulf Leasing and Security Investment Bank, you can compare the effects of market volatilities on Pak Gulf and Security Investment 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 Pak Gulf with a short position of Security Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Gulf and Security Investment.

Diversification Opportunities for Pak Gulf and Security Investment

0.13

Correlation Coefficient

Pak Gulf  Security Investment

Average diversification

The 3 months correlation between Pak and Security is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pak Gulf Leasing and Security Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Investment Bank and Pak Gulf 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 Pak Gulf Leasing are associated (or correlated) with Security Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Investment Bank has no effect on the direction of Pak Gulf i.e., Pak Gulf and Security Investment go up and down completely randomly.

Pair Corralation between Pak Gulf and Security Investment

Assuming the 90 days trading horizon Pak Gulf Leasing is expected to generate 1.27 times more return on investment than Security Investment. However, Pak Gulf is 1.27 times more volatile than Security Investment Bank. It trades about 0.17 of its potential returns per unit of risk. Security Investment Bank is currently generating about 0.0 per unit of risk. If you would invest  762.00  in Pak Gulf Leasing on September 14, 2024 and sell it today you would earn a total of  418.00  from holding Pak Gulf Leasing or generate 54.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Pak Gulf Leasing  vs.  Security Investment Bank

Pak Gulf Leasing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pak Gulf Leasing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pak Gulf sustained solid returns over the last few months and may actually be approaching a breakup point.

Security Investment Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pak Gulf and Security Investment

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

The idea behind Pak Gulf Leasing and Security Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.