Correlation Between Adamjee Insurance and Askari General
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Askari General 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 Adamjee Insurance and Askari General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Askari General Insurance, you can compare the effects of market volatilities on Adamjee Insurance and Askari General 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 Adamjee Insurance with a short position of Askari General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Askari General.
Diversification Opportunities for Adamjee Insurance and Askari General
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adamjee and Askari is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Adamjee Insurance 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 Adamjee Insurance are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Askari General go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Askari General
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.75 times less return on investment than Askari General. But when comparing it to its historical volatility, Adamjee Insurance is 1.23 times less risky than Askari General. It trades about 0.08 of its potential returns per unit of risk. Askari General Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,042 in Askari General Insurance on November 19, 2024 and sell it today you would earn a total of 2,153 from holding Askari General Insurance or generate 206.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.95% |
| Values | Daily Returns |
Adamjee Insurance vs. Askari General Insurance
Performance |
| Timeline |
| Adamjee Insurance |
| Askari General Insurance |
Adamjee Insurance and Askari General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Askari General
The main advantage of trading using opposite Adamjee Insurance and Askari General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Askari General 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 Askari General will offset losses from the drop in Askari General's long position.| Adamjee Insurance vs. Unilever Pakistan Foods | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. Matco Foods | Adamjee Insurance vs. National Foods |
| Askari General vs. Century Insurance | Askari General vs. TPL Insurance | Askari General vs. United Insurance | Askari General vs. Bank of Punjab |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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