Correlation Between 786 Investment and Bank Islami
Can any of the company-specific risk be diversified away by investing in both 786 Investment and Bank Islami 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 786 Investment and Bank Islami into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 786 Investment Limited and Bank Islami Pakistan, you can compare the effects of market volatilities on 786 Investment and Bank Islami 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 786 Investment with a short position of Bank Islami. Check out your portfolio center. Please also check ongoing floating volatility patterns of 786 Investment and Bank Islami.
Diversification Opportunities for 786 Investment and Bank Islami
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between 786 and Bank is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding 786 Investment Limited and Bank Islami Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Islami Pakistan and 786 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 786 Investment Limited are associated (or correlated) with Bank Islami. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Islami Pakistan has no effect on the direction of 786 Investment i.e., 786 Investment and Bank Islami go up and down completely randomly.
Pair Corralation between 786 Investment and Bank Islami
Assuming the 90 days trading horizon 786 Investment Limited is expected to generate 4.73 times more return on investment than Bank Islami. However, 786 Investment is 4.73 times more volatile than Bank Islami Pakistan. It trades about 0.11 of its potential returns per unit of risk. Bank Islami Pakistan is currently generating about 0.37 per unit of risk. If you would invest 619.00 in 786 Investment Limited on August 28, 2024 and sell it today you would earn a total of 67.00 from holding 786 Investment Limited or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
786 Investment Limited vs. Bank Islami Pakistan
Performance |
| Timeline |
| 786 Investment |
| Bank Islami Pakistan |
786 Investment and Bank Islami Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 786 Investment and Bank Islami
The main advantage of trading using opposite 786 Investment and Bank Islami positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 786 Investment position performs unexpectedly, Bank Islami 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 Bank Islami will offset losses from the drop in Bank Islami's long position.| 786 Investment vs. Habib Insurance | 786 Investment vs. Century Insurance | 786 Investment vs. Reliance Weaving Mills | 786 Investment vs. Media Times |
| Bank Islami vs. Shaheen Insurance | Bank Islami vs. National Bank of | Bank Islami vs. United Insurance | Bank Islami vs. MCB Bank |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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