Correlation Between Pakistan Telecommunicatio and Tariq CorpPref

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

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

Diversification Opportunities for Pakistan Telecommunicatio and Tariq CorpPref

-0.81

Correlation Coefficient

Pakistan Telecommunicatio  Tariq CorpPref

Pay attention - limited upside

The 3 months correlation between Pakistan and Tariq is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and Tariq CorpPref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tariq CorpPref 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 Tariq CorpPref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tariq CorpPref has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and Tariq CorpPref go up and down completely randomly.

Pair Corralation between Pakistan Telecommunicatio and Tariq CorpPref

Assuming the 90 days trading horizon Pakistan Telecommunication is expected to generate 0.69 times more return on investment than Tariq CorpPref. However, Pakistan Telecommunication is 1.44 times less risky than Tariq CorpPref. It trades about 0.1 of its potential returns per unit of risk. Tariq CorpPref is currently generating about 0.0 per unit of risk. If you would invest  1,141  in Pakistan Telecommunication on October 24, 2024 and sell it today you would earn a total of  1,336  from holding Pakistan Telecommunication or generate 117.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	51.25%
Values	Daily Returns

Pakistan Telecommunication  vs.  Tariq CorpPref

Pakistan Telecommunicatio

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pakistan Telecommunication are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Pakistan Telecommunicatio reported solid returns over the last few months and may actually be approaching a breakup point.

Tariq CorpPref

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Tariq CorpPref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, Tariq CorpPref reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pakistan Telecommunicatio and Tariq CorpPref

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

The idea behind Pakistan Telecommunication and Tariq CorpPref 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.