Correlation Between Pakistan State and ITTEFAQ Iron

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

By analyzing existing cross correlation between Pakistan State Oil and ITTEFAQ Iron Industries, you can compare the effects of market volatilities on Pakistan State and ITTEFAQ Iron 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 State with a short position of ITTEFAQ Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and ITTEFAQ Iron.

Diversification Opportunities for Pakistan State and ITTEFAQ Iron

0.5

Correlation Coefficient

Pakistan State  ITTEFAQ Iron

Very weak diversification

The 3 months correlation between Pakistan and ITTEFAQ is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and Pakistan State 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 State Oil are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of Pakistan State i.e., Pakistan State and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between Pakistan State and ITTEFAQ Iron

Assuming the 90 days trading horizon Pakistan State Oil is expected to generate 0.61 times more return on investment than ITTEFAQ Iron. However, Pakistan State Oil is 1.65 times less risky than ITTEFAQ Iron. It trades about 0.21 of its potential returns per unit of risk. ITTEFAQ Iron Industries is currently generating about 0.04 per unit of risk. If you would invest  37,307  in Pakistan State Oil on July 19, 2025 and sell it today you would earn a total of  10,268  from holding Pakistan State Oil or generate 27.52% return on investment over 90 days.

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

Pakistan State Oil  vs.  ITTEFAQ Iron Industries

Pakistan State Oil

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pakistan State Oil are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Pakistan State reported solid returns over the last few months and may actually be approaching a breakup point.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ITTEFAQ Iron Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, ITTEFAQ Iron may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Pakistan State and ITTEFAQ Iron

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

The idea behind Pakistan State Oil and ITTEFAQ Iron Industries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.