Correlation Between Nahar Industrial and Punjab Sind

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

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

Diversification Opportunities for Nahar Industrial and Punjab Sind

0.91

Correlation Coefficient

Nahar Industrial  Punjab Sind

Almost no diversification

The 3 months correlation between Nahar and Punjab is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises 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 Nahar Industrial 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 Nahar Industrial Enterprises 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 Nahar Industrial i.e., Nahar Industrial and Punjab Sind go up and down completely randomly.

Pair Corralation between Nahar Industrial and Punjab Sind

Assuming the 90 days trading horizon Nahar Industrial is expected to generate 1.33 times less return on investment than Punjab Sind. But when comparing it to its historical volatility, Nahar Industrial Enterprises is 1.11 times less risky than Punjab Sind. It trades about 0.04 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,186  in Punjab Sind Bank on September 14, 2024 and sell it today you would earn a total of  1,068  from holding Punjab Sind Bank or generate 25.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.25%
Values	Daily Returns

Nahar Industrial Enterprises  vs.  Punjab Sind Bank

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nahar Industrial Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Nahar Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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 latest uncertain 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.

Pair Trading with Nahar Industrial and Punjab Sind

The main advantage of trading using opposite Nahar Industrial and Punjab Sind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nahar Industrial 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 Nahar Industrial Enterprises 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.