Correlation Between Punjab Sind and ITI
Can any of the company-specific risk be diversified away by investing in both Punjab Sind and ITI 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 ITI 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 ITI Limited, you can compare the effects of market volatilities on Punjab Sind and ITI 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 ITI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab Sind and ITI.
Diversification Opportunities for Punjab Sind and ITI
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Punjab and ITI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and ITI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITI 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 ITI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITI Limited has no effect on the direction of Punjab Sind i.e., Punjab Sind and ITI go up and down completely randomly.
Pair Corralation between Punjab Sind and ITI
Assuming the 90 days trading horizon Punjab Sind Bank is expected to under-perform the ITI. But the stock apears to be less risky and, when comparing its historical volatility, Punjab Sind Bank is 2.06 times less risky than ITI. The stock trades about -0.03 of its potential returns per unit of risk. The ITI Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 29,320 in ITI Limited on September 13, 2024 and sell it today you would earn a total of 6,805 from holding ITI Limited or generate 23.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Punjab Sind Bank vs. ITI Limited
Performance |
Timeline |
Punjab Sind Bank |
ITI Limited |
Punjab Sind and ITI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Punjab Sind and ITI
The main advantage of trading using opposite Punjab Sind and ITI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Punjab Sind position performs unexpectedly, ITI 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 ITI will offset losses from the drop in ITI's long position.Punjab Sind vs. Univa Foods Limited | Punjab Sind vs. WESTLIFE FOODWORLD LIMITED | Punjab Sind vs. Fine Organic Industries | Punjab Sind vs. Punjab National Bank |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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