Correlation Between Rico Auto and Punjab Sind

Can any of the company-specific risk be diversified away by investing in both Rico Auto and Punjab Sind 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 Rico Auto and Punjab Sind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rico Auto Industries and Punjab Sind Bank, you can compare the effects of market volatilities on Rico Auto and Punjab Sind 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 Rico Auto with a short position of Punjab Sind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and Punjab Sind.

Diversification Opportunities for Rico Auto and Punjab Sind

0.79

Correlation Coefficient

Rico Auto  Punjab Sind

Poor diversification

The 3 months correlation between Rico and Punjab is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank and Rico Auto 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 Rico Auto Industries are associated (or correlated) with Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of Rico Auto i.e., Rico Auto and Punjab Sind go up and down completely randomly.

Pair Corralation between Rico Auto and Punjab Sind

Assuming the 90 days trading horizon Rico Auto is expected to generate 2.34 times less return on investment than Punjab Sind. In addition to that, Rico Auto is 1.01 times more volatile than Punjab Sind Bank. It trades about 0.02 of its total potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.04 per unit of volatility. If you would invest  3,167  in Punjab Sind Bank on September 23, 2024 and sell it today you would earn a total of  1,706  from holding Punjab Sind Bank or generate 53.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Rico Auto Industries  vs.  Punjab Sind Bank

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Rico Auto and Punjab Sind

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

The idea behind Rico Auto Industries and Punjab Sind Bank 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.