Correlation Between Allied Bank and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Allied Bank and Faysal Bank 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 Allied Bank and Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Bank and Faysal Bank, you can compare the effects of market volatilities on Allied Bank and Faysal Bank 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 Allied Bank with a short position of Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Bank and Faysal Bank.
Diversification Opportunities for Allied Bank and Faysal Bank
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allied and Faysal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Allied Bank and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank and Allied Bank 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 Allied Bank are associated (or correlated) with Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Allied Bank i.e., Allied Bank and Faysal Bank go up and down completely randomly.
Pair Corralation between Allied Bank and Faysal Bank
Assuming the 90 days trading horizon Allied Bank is expected to generate 0.64 times more return on investment than Faysal Bank. However, Allied Bank is 1.56 times less risky than Faysal Bank. It trades about 0.42 of its potential returns per unit of risk. Faysal Bank is currently generating about -0.07 per unit of risk. If you would invest 11,578 in Allied Bank on August 31, 2024 and sell it today you would earn a total of 2,396 from holding Allied Bank or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Bank vs. Faysal Bank
Performance |
| Timeline |
| Allied Bank |
| Faysal Bank |
Allied Bank and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Bank and Faysal Bank
The main advantage of trading using opposite Allied Bank and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Bank position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Allied Bank vs. Oil and Gas | Allied Bank vs. Pakistan State Oil | Allied Bank vs. Pakistan Petroleum | Allied Bank vs. Fauji Fertilizer |
| Faysal Bank vs. Wah Nobel Chemicals | Faysal Bank vs. Engro Polymer Chemicals | Faysal Bank vs. Unity Foods | Faysal Bank vs. National Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |