Correlation Between Adamjee Insurance and Habib Insurance

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Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Habib Insurance 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 Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Habib Insurance, you can compare the effects of market volatilities on Adamjee Insurance and Habib Insurance 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 Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Habib Insurance.

Diversification Opportunities for Adamjee Insurance and Habib Insurance

AdamjeeHabibDiversified AwayAdamjeeHabibDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Adamjee and Habib is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib 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 Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Habib Insurance go up and down completely randomly.

Pair Corralation between Adamjee Insurance and Habib Insurance

Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.33 times more return on investment than Habib Insurance. However, Adamjee Insurance is 1.33 times more volatile than Habib Insurance. It trades about 0.08 of its potential returns per unit of risk. Habib Insurance is currently generating about 0.03 per unit of risk. If you would invest  4,984  in Adamjee Insurance on November 25, 2024 and sell it today you would earn a total of  174.00  from holding Adamjee Insurance or generate 3.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Adamjee Insurance  vs.  Habib Insurance

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 01020304050
JavaScript chart by amCharts 3.21.15AICL HICL
       Timeline  
Adamjee Insurance 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Adamjee Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adamjee Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb40455055
Habib Insurance 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Habib Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Habib Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.577.588.599.510

Adamjee Insurance and Habib Insurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.66-7.23-4.81-2.380.02.424.987.5310.0812.63 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15AICL HICL
       Returns  

Pair Trading with Adamjee Insurance and Habib Insurance

The main advantage of trading using opposite Adamjee Insurance and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Habib Insurance 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 Insurance will offset losses from the drop in Habib Insurance's long position.
The idea behind Adamjee Insurance and Habib Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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