Correlation Between Punjab National and Styrenix Performance

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

Diversification Opportunities for Punjab National and Styrenix Performance

0.53

Correlation Coefficient

Punjab National  Styrenix Performance

Very weak diversification

The 3 months correlation between Punjab and Styrenix is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Punjab National Bank and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance 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 Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Punjab National i.e., Punjab National and Styrenix Performance go up and down completely randomly.

Pair Corralation between Punjab National and Styrenix Performance

Assuming the 90 days trading horizon Punjab National Bank is expected to under-perform the Styrenix Performance. In addition to that, Punjab National is 1.02 times more volatile than Styrenix Performance Materials. It trades about -0.04 of its total potential returns per unit of risk. Styrenix Performance Materials is currently generating about -0.02 per unit of volatility. If you would invest  262,280  in Styrenix Performance Materials on September 4, 2024 and sell it today you would lose (11,855) from holding Styrenix Performance Materials or give up 4.52% of portfolio value over 90 days.

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

Punjab National Bank  vs.  Styrenix Performance Materials

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Styrenix Performance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Styrenix Performance Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Styrenix Performance is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Punjab National and Styrenix Performance

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

The idea behind Punjab National Bank and Styrenix Performance Materials 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.