Correlation Between Askari General and Pakistan International
Can any of the company-specific risk be diversified away by investing in both Askari General and Pakistan International 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 Askari General and Pakistan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari General Insurance and Pakistan International Bulk, you can compare the effects of market volatilities on Askari General and Pakistan International 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 Askari General with a short position of Pakistan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Pakistan International.
Diversification Opportunities for Askari General and Pakistan International
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Askari and Pakistan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Pakistan International Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan International and Askari General 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 Askari General Insurance are associated (or correlated) with Pakistan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan International has no effect on the direction of Askari General i.e., Askari General and Pakistan International go up and down completely randomly.
Pair Corralation between Askari General and Pakistan International
Assuming the 90 days trading horizon Askari General Insurance is expected to generate 0.62 times more return on investment than Pakistan International. However, Askari General Insurance is 1.61 times less risky than Pakistan International. It trades about 0.2 of its potential returns per unit of risk. Pakistan International Bulk is currently generating about 0.09 per unit of risk. If you would invest 1,737 in Askari General Insurance on November 3, 2024 and sell it today you would earn a total of 1,338 from holding Askari General Insurance or generate 77.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Askari General Insurance vs. Pakistan International Bulk
Performance |
| Timeline |
| Askari General Insurance |
| Pakistan International |
Askari General and Pakistan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and Pakistan International
The main advantage of trading using opposite Askari General and Pakistan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Pakistan International 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 Pakistan International will offset losses from the drop in Pakistan International's long position.| Askari General vs. Adamjee Insurance | Askari General vs. Apna Microfinance Bank | Askari General vs. Air Link Communication | Askari General vs. Roshan Packages |
| Pakistan International vs. ORIX Leasing Pakistan | Pakistan International vs. Bank of Punjab | Pakistan International vs. Jubilee Life Insurance | Pakistan International vs. Atlas Insurance |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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