Correlation Between Punjab Sind and Bharti Airtel

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

Diversification Opportunities for Punjab Sind and Bharti Airtel

0.59

Correlation Coefficient

Punjab Sind  Bharti Airtel

Very weak diversification

The 3 months correlation between Punjab and Bharti is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and Bharti Airtel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bharti Airtel Limited 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 Bharti Airtel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bharti Airtel Limited has no effect on the direction of Punjab Sind i.e., Punjab Sind and Bharti Airtel go up and down completely randomly.

Pair Corralation between Punjab Sind and Bharti Airtel

Assuming the 90 days trading horizon Punjab Sind Bank is expected to under-perform the Bharti Airtel. In addition to that, Punjab Sind is 1.13 times more volatile than Bharti Airtel Limited. It trades about -0.03 of its total potential returns per unit of risk. Bharti Airtel Limited is currently generating about 0.02 per unit of volatility. If you would invest  157,725  in Bharti Airtel Limited on September 27, 2024 and sell it today you would earn a total of  665.00  from holding Bharti Airtel Limited or generate 0.42% return on investment over 90 days.

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

Punjab Sind Bank  vs.  Bharti Airtel 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 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bharti Airtel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Punjab Sind and Bharti Airtel

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

The idea behind Punjab Sind Bank and Bharti Airtel 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.