Correlation Between Askari Bank and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Askari Bank and Adamjee 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 Askari Bank and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari Bank and Adamjee Insurance, you can compare the effects of market volatilities on Askari Bank and Adamjee 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 Askari Bank with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari Bank and Adamjee Insurance.
Diversification Opportunities for Askari Bank and Adamjee Insurance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Askari and Adamjee is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Askari Bank 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 Askari Bank are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Askari Bank i.e., Askari Bank and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Askari Bank and Adamjee Insurance
Assuming the 90 days trading horizon Askari Bank is expected to generate 0.78 times more return on investment than Adamjee Insurance. However, Askari Bank is 1.28 times less risky than Adamjee Insurance. It trades about 0.19 of its potential returns per unit of risk. Adamjee Insurance is currently generating about -0.05 per unit of risk. If you would invest 2,964 in Askari Bank on August 29, 2024 and sell it today you would earn a total of 228.00 from holding Askari Bank or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari Bank vs. Adamjee Insurance
Performance |
| Timeline |
| Askari Bank |
| Adamjee Insurance |
Askari Bank and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari Bank and Adamjee Insurance
The main advantage of trading using opposite Askari Bank and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank position performs unexpectedly, Adamjee 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Askari Bank vs. Hi Tech Lubricants | Askari Bank vs. Ittehad Chemicals | Askari Bank vs. Pakistan Aluminium Beverage | Askari Bank vs. 786 Investment Limited |
| Adamjee Insurance vs. Habib Bank | Adamjee Insurance vs. National Bank of | Adamjee Insurance vs. United Bank | Adamjee Insurance vs. MCB Bank |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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