Correlation Between Security Investment and Pakistan Credit

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

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

Diversification Opportunities for Security Investment and Pakistan Credit

-0.39

Correlation Coefficient

Security Investment  Pakistan Credit

Very good diversification

The 3 months correlation between Security and Pakistan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Security Investment Bank and The Pakistan Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Credit and Security Investment 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 Security Investment Bank are associated (or correlated) with Pakistan Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Credit has no effect on the direction of Security Investment i.e., Security Investment and Pakistan Credit go up and down completely randomly.

Pair Corralation between Security Investment and Pakistan Credit

Assuming the 90 days trading horizon Security Investment is expected to generate 4.22 times less return on investment than Pakistan Credit. In addition to that, Security Investment is 1.2 times more volatile than The Pakistan Credit. It trades about 0.12 of its total potential returns per unit of risk. The Pakistan Credit is currently generating about 0.63 per unit of volatility. If you would invest  1,656  in The Pakistan Credit on April 25, 2025 and sell it today you would earn a total of  893.00  from holding The Pakistan Credit or generate 53.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.51%
Values	Daily Returns

Security Investment Bank  vs.  The Pakistan Credit

Security Investment Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Investment Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Security Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pakistan Credit

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in The Pakistan Credit are ranked lower than 49 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Pakistan Credit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Security Investment and Pakistan Credit

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

The idea behind Security Investment Bank and The Pakistan Credit 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.