Correlation Between Punjab National and Emkay Global

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

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

Diversification Opportunities for Punjab National and Emkay Global

0.49

Correlation Coefficient

Punjab National  Emkay Global

Very weak diversification

The 3 months correlation between Punjab and Emkay is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National Bank and Emkay Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emkay Global Financial and Punjab National 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 Punjab National Bank are associated (or correlated) with Emkay Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emkay Global Financial has no effect on the direction of Punjab National i.e., Punjab National and Emkay Global go up and down completely randomly.

Pair Corralation between Punjab National and Emkay Global

Assuming the 90 days trading horizon Punjab National is expected to generate 35.26 times less return on investment than Emkay Global. But when comparing it to its historical volatility, Punjab National Bank is 1.08 times less risky than Emkay Global. It trades about 0.01 of its potential returns per unit of risk. Emkay Global Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  24,200  in Emkay Global Financial on October 10, 2024 and sell it today you would earn a total of  7,300  from holding Emkay Global Financial or generate 30.17% return on investment over 90 days.

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

Punjab National Bank  vs.  Emkay Global Financial

Punjab National Bank

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Punjab National is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Emkay Global Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emkay Global Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Emkay Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Punjab National and Emkay Global

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

The idea behind Punjab National Bank and Emkay Global Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.