Correlation Between Unilever Pakistan and Bawany Air

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

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

Diversification Opportunities for Unilever Pakistan and Bawany Air

-0.93

Correlation Coefficient

Unilever Pakistan  Bawany Air

Pay attention - limited upside

The 3 months correlation between Unilever and Bawany is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods and Bawany Air Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bawany Air Products and Unilever Pakistan 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 Unilever Pakistan Foods are associated (or correlated) with Bawany Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bawany Air Products has no effect on the direction of Unilever Pakistan i.e., Unilever Pakistan and Bawany Air go up and down completely randomly.

Pair Corralation between Unilever Pakistan and Bawany Air

Assuming the 90 days trading horizon Unilever Pakistan Foods is expected to generate 0.29 times more return on investment than Bawany Air. However, Unilever Pakistan Foods is 3.51 times less risky than Bawany Air. It trades about 0.19 of its potential returns per unit of risk. Bawany Air Products is currently generating about -0.2 per unit of risk. If you would invest  2,100,001  in Unilever Pakistan Foods on December 24, 2024 and sell it today you would earn a total of  256,554  from holding Unilever Pakistan Foods or generate 12.22% return on investment over 90 days.

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

Unilever Pakistan Foods  vs.  Bawany Air Products

Unilever Pakistan Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unilever Pakistan Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unilever Pakistan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bawany Air Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bawany Air Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Unilever Pakistan and Bawany Air

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

The idea behind Unilever Pakistan Foods and Bawany Air Products 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.