Correlation Between MSP Steel and Punjab Sind

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

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

Diversification Opportunities for MSP Steel and Punjab Sind

0.74

Correlation Coefficient

MSP Steel  Punjab Sind

Poor diversification

The 3 months correlation between MSP and Punjab is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MSP Steel Power 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 MSP Steel 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 MSP Steel Power 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 MSP Steel i.e., MSP Steel and Punjab Sind go up and down completely randomly.

Pair Corralation between MSP Steel and Punjab Sind

Assuming the 90 days trading horizon MSP Steel Power is expected to under-perform the Punjab Sind. In addition to that, MSP Steel is 1.44 times more volatile than Punjab Sind Bank. It trades about -0.06 of its total potential returns per unit of risk. Punjab Sind Bank is currently generating about -0.03 per unit of volatility. If you would invest  5,409  in Punjab Sind Bank on September 19, 2024 and sell it today you would lose (274.00) from holding Punjab Sind Bank or give up 5.07% of portfolio value over 90 days.

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

MSP Steel Power  vs.  Punjab Sind Bank

MSP Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSP Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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 rather sound technical and fundamental indicators, Punjab Sind is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MSP Steel and Punjab Sind

The main advantage of trading using opposite MSP Steel and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Steel 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 MSP Steel Power 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 Stocks Directory module to find actively traded stocks across global markets.