Correlation Between Punjab Sind and ROUTE MOBILE

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

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

Diversification Opportunities for Punjab Sind and ROUTE MOBILE

0.65

Correlation Coefficient

Punjab Sind  ROUTE MOBILE

Poor diversification

The 3 months correlation between Punjab and ROUTE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and ROUTE MOBILE LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROUTE MOBILE LIMITED and Punjab Sind 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 Punjab Sind Bank are associated (or correlated) with ROUTE MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROUTE MOBILE LIMITED has no effect on the direction of Punjab Sind i.e., Punjab Sind and ROUTE MOBILE go up and down completely randomly.

Pair Corralation between Punjab Sind and ROUTE MOBILE

Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 1.52 times more return on investment than ROUTE MOBILE. However, Punjab Sind is 1.52 times more volatile than ROUTE MOBILE LIMITED. It trades about -0.09 of its potential returns per unit of risk. ROUTE MOBILE LIMITED is currently generating about -0.16 per unit of risk. If you would invest  5,588  in Punjab Sind Bank on September 24, 2024 and sell it today you would lose (715.00) from holding Punjab Sind Bank or give up 12.8% of portfolio value over 90 days.

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

Punjab Sind Bank  vs.  ROUTE MOBILE LIMITED

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ROUTE MOBILE LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROUTE MOBILE LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Punjab Sind and ROUTE MOBILE

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

The idea behind Punjab Sind Bank and ROUTE MOBILE LIMITED 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.