Correlation Between Pakistan State and WorldCall Telecom

Can any of the company-specific risk be diversified away by investing in both Pakistan State and WorldCall Telecom 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 Pakistan State and WorldCall Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pakistan State Oil and WorldCall Telecom, you can compare the effects of market volatilities on Pakistan State and WorldCall Telecom 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 Pakistan State with a short position of WorldCall Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and WorldCall Telecom.

Diversification Opportunities for Pakistan State and WorldCall Telecom

0.55

Correlation Coefficient

Pakistan State  WorldCall Telecom

Very weak diversification

The 3 months correlation between Pakistan and WorldCall is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and WorldCall Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WorldCall Telecom and Pakistan State 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 Pakistan State Oil are associated (or correlated) with WorldCall Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WorldCall Telecom has no effect on the direction of Pakistan State i.e., Pakistan State and WorldCall Telecom go up and down completely randomly.

Pair Corralation between Pakistan State and WorldCall Telecom

Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 0.8 times more return on investment than WorldCall Telecom. However, Pakistan State Oil is 1.25 times less risky than WorldCall Telecom. It trades about 0.05 of its potential returns per unit of risk. WorldCall Telecom is currently generating about -0.03 per unit of risk. If you would invest  30,983  in Pakistan State Oil on December 5, 2024 and sell it today you would earn a total of  2,379  from holding Pakistan State Oil or generate 7.68% return on investment over 90 days.

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

Pakistan State Oil  vs.  WorldCall Telecom

Pakistan State Oil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pakistan State Oil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Pakistan State may actually be approaching a critical reversion point that can send shares even higher in April 2025.

WorldCall Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days WorldCall Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Pakistan State and WorldCall Telecom

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

The idea behind Pakistan State Oil and WorldCall Telecom 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.