Correlation Between Punjab Sind and Arvind Fashions

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

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

Diversification Opportunities for Punjab Sind and Arvind Fashions

0.34

Correlation Coefficient

Punjab Sind  Arvind Fashions

Weak diversification

The 3 months correlation between Punjab and Arvind is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and Arvind Fashions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arvind Fashions and Punjab Sind 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 Sind Bank are associated (or correlated) with Arvind Fashions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arvind Fashions has no effect on the direction of Punjab Sind i.e., Punjab Sind and Arvind Fashions go up and down completely randomly.

Pair Corralation between Punjab Sind and Arvind Fashions

Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 1.37 times more return on investment than Arvind Fashions. However, Punjab Sind is 1.37 times more volatile than Arvind Fashions Limited. It trades about -0.05 of its potential returns per unit of risk. Arvind Fashions Limited is currently generating about -0.11 per unit of risk. If you would invest  5,699  in Punjab Sind Bank on September 15, 2024 and sell it today you would lose (500.00) from holding Punjab Sind Bank or give up 8.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Punjab Sind Bank  vs.  Arvind Fashions Limited

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Arvind Fashions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arvind Fashions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Punjab Sind and Arvind Fashions

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

The idea behind Punjab Sind Bank and Arvind Fashions Limited 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.