Correlation Between Agritech and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Agritech and Habib 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 Agritech and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agritech and Habib Bank, you can compare the effects of market volatilities on Agritech and Habib 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 Agritech with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agritech and Habib Bank.
Diversification Opportunities for Agritech and Habib Bank
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agritech and Habib is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Agritech and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Agritech 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 Agritech are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Agritech i.e., Agritech and Habib Bank go up and down completely randomly.
Pair Corralation between Agritech and Habib Bank
Assuming the 90 days trading horizon Agritech is expected to generate 2.09 times more return on investment than Habib Bank. However, Agritech is 2.09 times more volatile than Habib Bank. It trades about 0.15 of its potential returns per unit of risk. Habib Bank is currently generating about 0.16 per unit of risk. If you would invest 475.00 in Agritech on August 31, 2024 and sell it today you would earn a total of 3,334 from holding Agritech or generate 701.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agritech vs. Habib Bank
Performance |
| Timeline |
| Agritech |
| Habib Bank |
Agritech and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agritech and Habib Bank
The main advantage of trading using opposite Agritech and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agritech position performs unexpectedly, Habib 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 Habib Bank will offset losses from the drop in Habib Bank's long position.| Agritech vs. Matco Foods | Agritech vs. Unilever Pakistan Foods | Agritech vs. Roshan Packages | Agritech vs. Pakistan Synthetics |
| Habib Bank vs. WorldCall Telecom | Habib Bank vs. Sindh Modaraba Management | Habib Bank vs. Adamjee Insurance | Habib Bank vs. East West 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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