Correlation Between Allied Bank and Honda Atlas
Can any of the company-specific risk be diversified away by investing in both Allied Bank and Honda Atlas 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 Honda Atlas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Bank and Honda Atlas Cars, you can compare the effects of market volatilities on Allied Bank and Honda Atlas 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 Honda Atlas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Bank and Honda Atlas.
Diversification Opportunities for Allied Bank and Honda Atlas
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and Honda is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Allied Bank and Honda Atlas Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Atlas Cars 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 Honda Atlas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Atlas Cars has no effect on the direction of Allied Bank i.e., Allied Bank and Honda Atlas go up and down completely randomly.
Pair Corralation between Allied Bank and Honda Atlas
Assuming the 90 days trading horizon Allied Bank is expected to generate 0.47 times more return on investment than Honda Atlas. However, Allied Bank is 2.11 times less risky than Honda Atlas. It trades about 0.33 of its potential returns per unit of risk. Honda Atlas Cars is currently generating about 0.08 per unit of risk. If you would invest 10,857 in Allied Bank on August 28, 2024 and sell it today you would earn a total of 1,344 from holding Allied Bank or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Bank vs. Honda Atlas Cars
Performance |
| Timeline |
| Allied Bank |
| Honda Atlas Cars |
Allied Bank and Honda Atlas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Bank and Honda Atlas
The main advantage of trading using opposite Allied Bank and Honda Atlas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Bank position performs unexpectedly, Honda Atlas 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 Honda Atlas will offset losses from the drop in Honda Atlas' long position.| Allied Bank vs. National Bank of | Allied Bank vs. Meezan Bank | Allied Bank vs. Bank Al Habib | Allied Bank vs. Habib Metropolitan Bank |
| Honda Atlas vs. Habib Bank | Honda Atlas vs. National Bank of | Honda Atlas vs. United Bank | Honda Atlas 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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