Correlation Between Aisha Steel and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Aisha Steel and Habib 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 Aisha Steel and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aisha Steel Mills and Habib Bank, you can compare the effects of market volatilities on Aisha Steel and Habib 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 Aisha Steel with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Habib Bank.
Diversification Opportunities for Aisha Steel and Habib Bank
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aisha and Habib is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Aisha Steel 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 Aisha Steel Mills are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Aisha Steel i.e., Aisha Steel and Habib Bank go up and down completely randomly.
Pair Corralation between Aisha Steel and Habib Bank
Assuming the 90 days trading horizon Aisha Steel is expected to generate 2.45 times less return on investment than Habib Bank. In addition to that, Aisha Steel is 1.38 times more volatile than Habib Bank. It trades about 0.05 of its total potential returns per unit of risk. Habib Bank is currently generating about 0.16 per unit of volatility. If you would invest 5,905 in Habib Bank on August 31, 2024 and sell it today you would earn a total of 12,195 from holding Habib Bank or generate 206.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Aisha Steel Mills vs. Habib Bank
Performance |
| Timeline |
| Aisha Steel Mills |
| Habib Bank |
Aisha Steel and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aisha Steel and Habib Bank
The main advantage of trading using opposite Aisha Steel and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel position performs unexpectedly, Habib 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 Habib Bank will offset losses from the drop in Habib Bank's long position.| Aisha Steel vs. 786 Investment Limited | Aisha Steel vs. Pakistan Synthetics | Aisha Steel vs. Ittehad Chemicals | Aisha Steel vs. Shifa International Hospitals |
| Habib Bank vs. WorldCall Telecom | Habib Bank vs. Sindh Modaraba Management | Habib Bank vs. Adamjee Insurance | Habib Bank vs. East West Insurance |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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