Correlation Between Allied Bank and Security Investment
Can any of the company-specific risk be diversified away by investing in both Allied Bank and Security Investment 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 Security Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Bank and Security Investment Bank, you can compare the effects of market volatilities on Allied Bank and Security Investment 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 Security Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Bank and Security Investment.
Diversification Opportunities for Allied Bank and Security Investment
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Allied and Security is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Allied Bank and Security Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Investment 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 Security Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Investment Bank has no effect on the direction of Allied Bank i.e., Allied Bank and Security Investment go up and down completely randomly.
Pair Corralation between Allied Bank and Security Investment
Assuming the 90 days trading horizon Allied Bank is expected to generate 1.81 times less return on investment than Security Investment. But when comparing it to its historical volatility, Allied Bank is 5.12 times less risky than Security Investment. It trades about 0.15 of its potential returns per unit of risk. Security Investment Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 384.00 in Security Investment Bank on September 14, 2024 and sell it today you would earn a total of 113.00 from holding Security Investment Bank or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.22% |
| Values | Daily Returns |
Allied Bank vs. Security Investment Bank
Performance |
| Timeline |
| Allied Bank |
| Security Investment Bank |
Allied Bank and Security Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Bank and Security Investment
The main advantage of trading using opposite Allied Bank and Security Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Bank position performs unexpectedly, Security Investment 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 Security Investment will offset losses from the drop in Security Investment's long position.| Allied Bank vs. Security Investment Bank | Allied Bank vs. Pakistan Telecommunication | Allied Bank vs. Hi Tech Lubricants | Allied Bank vs. United Insurance |
| Security Investment vs. Pakistan Tobacco | Security Investment vs. MCB Investment Manag | Security Investment vs. Allied Bank | Security Investment vs. Pak Datacom |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |