Correlation Between Punjab Sind and Tree House

Can any of the company-specific risk be diversified away by investing in both Punjab Sind and Tree House 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 Tree House 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 Tree House Education, you can compare the effects of market volatilities on Punjab Sind and Tree House 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 Tree House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Punjab Sind and Tree House.

Diversification Opportunities for Punjab Sind and Tree House

0.81

Correlation Coefficient

Punjab Sind  Tree House

Very poor diversification

The 3 months correlation between Punjab and Tree is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Punjab Sind Bank and Tree House Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree House Education 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 Tree House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree House Education has no effect on the direction of Punjab Sind i.e., Punjab Sind and Tree House go up and down completely randomly.

Pair Corralation between Punjab Sind and Tree House

Assuming the 90 days trading horizon Punjab Sind Bank is expected to generate 0.88 times more return on investment than Tree House. However, Punjab Sind Bank is 1.14 times less risky than Tree House. It trades about -0.01 of its potential returns per unit of risk. Tree House Education is currently generating about -0.06 per unit of risk. If you would invest  5,574  in Punjab Sind Bank on September 8, 2024 and sell it today you would lose (171.00) from holding Punjab Sind Bank or give up 3.07% of portfolio value over 90 days.

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

Punjab Sind Bank  vs.  Tree House Education

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Tree House Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tree House Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Punjab Sind and Tree House

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

The idea behind Punjab Sind Bank and Tree House Education 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.