Correlation Between Adamjee Insurance and Meezan Bank
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Meezan 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 Adamjee Insurance and Meezan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Meezan Bank, you can compare the effects of market volatilities on Adamjee Insurance and Meezan 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 Adamjee Insurance with a short position of Meezan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Meezan Bank.
Diversification Opportunities for Adamjee Insurance and Meezan Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adamjee and Meezan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Meezan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meezan Bank 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 Meezan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meezan Bank has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Meezan Bank go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Meezan Bank
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.3 times less return on investment than Meezan Bank. In addition to that, Adamjee Insurance is 1.12 times more volatile than Meezan Bank. It trades about 0.09 of its total potential returns per unit of risk. Meezan Bank is currently generating about 0.13 per unit of volatility. If you would invest 8,104 in Meezan Bank on September 12, 2024 and sell it today you would earn a total of 16,250 from holding Meezan Bank or generate 200.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.55% |
| Values | Daily Returns |
Adamjee Insurance vs. Meezan Bank
Performance |
| Timeline |
| Adamjee Insurance |
| Meezan Bank |
Adamjee Insurance and Meezan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Meezan Bank
The main advantage of trading using opposite Adamjee Insurance and Meezan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Meezan 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 Meezan Bank will offset losses from the drop in Meezan Bank's long position.| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| Meezan Bank vs. Adamjee Insurance | Meezan Bank vs. NetSol Technologies | Meezan Bank vs. 786 Investment Limited | Meezan Bank vs. Engro Polymer Chemicals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |