Correlation Between Adamjee Insurance and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Hi Tech 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 Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Hi Tech Lubricants, you can compare the effects of market volatilities on Adamjee Insurance and Hi Tech 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 Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Hi Tech.
Diversification Opportunities for Adamjee Insurance and Hi Tech
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adamjee and HTL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants 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 Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Hi Tech go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Hi Tech
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.01 times more return on investment than Hi Tech. However, Adamjee Insurance is 1.01 times more volatile than Hi Tech Lubricants. It trades about -0.02 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about -0.1 per unit of risk. If you would invest 5,117 in Adamjee Insurance on November 18, 2024 and sell it today you would lose (66.00) from holding Adamjee Insurance or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Hi Tech Lubricants
Performance |
| Timeline |
| Adamjee Insurance |
| Hi Tech Lubricants |
Adamjee Insurance and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Hi Tech
The main advantage of trading using opposite Adamjee Insurance and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| Adamjee Insurance vs. Shaheen Insurance | Adamjee Insurance vs. Reliance Insurance Co | Adamjee Insurance vs. Lotte Chemical Pakistan | Adamjee Insurance vs. NetSol Technologies |
| Hi Tech vs. Crescent Steel Allied | Hi Tech vs. Beco Steel | Hi Tech vs. Pakistan Tobacco | Hi Tech vs. Arpak International Investment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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