Correlation Between Punjab National and Punjab Sind

Can any of the company-specific risk be diversified away by investing in both Punjab National and Punjab Sind 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 Punjab Sind 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 Punjab Sind Bank, you can compare the effects of market volatilities on Punjab National and Punjab Sind 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 Punjab Sind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab National and Punjab Sind.

Diversification Opportunities for Punjab National and Punjab Sind

0.83

Correlation Coefficient

Punjab National  Punjab Sind

Very poor diversification

The 3 months correlation between Punjab and Punjab is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National Bank and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank 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 Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Punjab National i.e., Punjab National and Punjab Sind go up and down completely randomly.

Pair Corralation between Punjab National and Punjab Sind

Assuming the 90 days trading horizon Punjab National Bank is expected to generate 0.62 times more return on investment than Punjab Sind. However, Punjab National Bank is 1.62 times less risky than Punjab Sind. It trades about -0.16 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about -0.13 per unit of risk. If you would invest  10,797  in Punjab National Bank on December 3, 2024 and sell it today you would lose (2,058) from holding Punjab National Bank or give up 19.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Punjab National Bank  vs.  Punjab Sind Bank

Punjab National Bank

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Punjab Sind Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Punjab National and Punjab Sind

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

The idea behind Punjab National Bank and Punjab Sind 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.