Correlation Between Pakistan Telecommunicatio and Big Bird

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

By analyzing existing cross correlation between Pakistan Telecommunication and Big Bird Foods, you can compare the effects of market volatilities on Pakistan Telecommunicatio and Big Bird 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 Telecommunicatio with a short position of Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and Big Bird.

Diversification Opportunities for Pakistan Telecommunicatio and Big Bird

0.54

Correlation Coefficient

Pakistan Telecommunicatio  Big Bird

Very weak diversification

The 3 months correlation between Pakistan and Big is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods and Pakistan Telecommunicatio 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 Telecommunication are associated (or correlated) with Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and Big Bird go up and down completely randomly.

Pair Corralation between Pakistan Telecommunicatio and Big Bird

Assuming the 90 days trading horizon Pakistan Telecommunication is expected to under-perform the Big Bird. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Telecommunication is 1.46 times less risky than Big Bird. The stock trades about -0.09 of its potential returns per unit of risk. The Big Bird Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,184  in Big Bird Foods on December 22, 2024 and sell it today you would lose (134.00) from holding Big Bird Foods or give up 2.58% of portfolio value over 90 days.

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

Pakistan Telecommunication  vs.  Big Bird Foods

Pakistan Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pakistan Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Big Bird Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Bird Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Big Bird is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pakistan Telecommunicatio and Big Bird

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

The idea behind Pakistan Telecommunication and Big Bird Foods 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.