Correlation Between Pakistan Refinery and Media Times

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

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

Diversification Opportunities for Pakistan Refinery and Media Times

-0.11

Correlation Coefficient

Pakistan Refinery  Media Times

Good diversification

The 3 months correlation between Pakistan and Media is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Refinery and Media Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Times and Pakistan Refinery 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 Refinery are associated (or correlated) with Media Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Times has no effect on the direction of Pakistan Refinery i.e., Pakistan Refinery and Media Times go up and down completely randomly.

Pair Corralation between Pakistan Refinery and Media Times

Assuming the 90 days trading horizon Pakistan Refinery is expected to generate 1.31 times less return on investment than Media Times. But when comparing it to its historical volatility, Pakistan Refinery is 2.94 times less risky than Media Times. It trades about 0.16 of its potential returns per unit of risk. Media Times is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Media Times on September 5, 2024 and sell it today you would earn a total of  51.00  from holding Media Times or generate 22.17% return on investment over 90 days.

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

Pakistan Refinery  vs.  Media Times

Pakistan Refinery

Risk-Adjusted Performance

12 of 100

Good

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

Media Times

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Media Times are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Media Times sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pakistan Refinery and Media Times

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

The idea behind Pakistan Refinery and Media Times 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..