Correlation Between Pakistan Telecommunicatio and Synthetic Products

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

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

Diversification Opportunities for Pakistan Telecommunicatio and Synthetic Products

0.68

Correlation Coefficient

Pakistan Telecommunicatio  Synthetic Products

Poor diversification

The 3 months correlation between Pakistan and Synthetic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and Synthetic Products Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthetic Products and Pakistan Telecommunicatio 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 Telecommunication are associated (or correlated) with Synthetic Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthetic Products has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and Synthetic Products go up and down completely randomly.

Pair Corralation between Pakistan Telecommunicatio and Synthetic Products

Assuming the 90 days trading horizon Pakistan Telecommunicatio is expected to generate 1.39 times less return on investment than Synthetic Products. But when comparing it to its historical volatility, Pakistan Telecommunication is 1.01 times less risky than Synthetic Products. It trades about 0.07 of its potential returns per unit of risk. Synthetic Products Enterprises is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,004  in Synthetic Products Enterprises on April 24, 2025 and sell it today you would earn a total of  837.00  from holding Synthetic Products Enterprises or generate 20.9% return on investment over 90 days.

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

Pakistan Telecommunication  vs.  Synthetic Products Enterprises

Pakistan Telecommunicatio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pakistan Telecommunication are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Pakistan Telecommunicatio reported solid returns over the last few months and may actually be approaching a breakup point.

Synthetic Products

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synthetic Products Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Synthetic Products sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pakistan Telecommunicatio and Synthetic Products

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

The idea behind Pakistan Telecommunication and Synthetic Products Enterprises 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.