Correlation Between Pakistan Telecommunicatio and Sindh Modaraba

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

By analyzing existing cross correlation between Pakistan Telecommunication and Sindh Modaraba Management, you can compare the effects of market volatilities on Pakistan Telecommunicatio and Sindh Modaraba 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 Sindh Modaraba. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and Sindh Modaraba.

Diversification Opportunities for Pakistan Telecommunicatio and Sindh Modaraba

-0.31

Correlation Coefficient

Pakistan Telecommunicatio  Sindh Modaraba

Very good diversification

The 3 months correlation between Pakistan and Sindh is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and Sindh Modaraba Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sindh Modaraba Management 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 Sindh Modaraba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sindh Modaraba Management has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and Sindh Modaraba go up and down completely randomly.

Pair Corralation between Pakistan Telecommunicatio and Sindh Modaraba

Assuming the 90 days trading horizon Pakistan Telecommunication is expected to under-perform the Sindh Modaraba. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Telecommunication is 1.22 times less risky than Sindh Modaraba. The stock trades about -0.1 of its potential returns per unit of risk. The Sindh Modaraba Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Sindh Modaraba Management on December 31, 2024 and sell it today you would earn a total of  72.00  from holding Sindh Modaraba Management or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Pakistan Telecommunication  vs.  Sindh Modaraba Management

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 May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sindh Modaraba Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sindh Modaraba Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Sindh Modaraba may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Pakistan Telecommunicatio and Sindh Modaraba

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

The idea behind Pakistan Telecommunication and Sindh Modaraba Management 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.