Correlation Between Bank Alfalah and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah 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 Bank Alfalah and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and Hi Tech Lubricants, you can compare the effects of market volatilities on Bank Alfalah 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 Bank Alfalah with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and Hi Tech.
Diversification Opportunities for Bank Alfalah and Hi Tech
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and HTL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah 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 Bank Alfalah 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 Bank Alfalah 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 Bank Alfalah i.e., Bank Alfalah and Hi Tech go up and down completely randomly.
Pair Corralation between Bank Alfalah and Hi Tech
Assuming the 90 days trading horizon Bank Alfalah is expected to generate 0.66 times more return on investment than Hi Tech. However, Bank Alfalah is 1.51 times less risky than Hi Tech. It trades about 0.14 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.06 per unit of risk. If you would invest 2,313 in Bank Alfalah on September 3, 2024 and sell it today you would earn a total of 5,876 from holding Bank Alfalah or generate 254.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Alfalah vs. Hi Tech Lubricants
Performance |
| Timeline |
| Bank Alfalah |
| Hi Tech Lubricants |
Bank Alfalah and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Alfalah and Hi Tech
The main advantage of trading using opposite Bank Alfalah and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah 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.| Bank Alfalah vs. Reliance Insurance Co | Bank Alfalah vs. Air Link Communication | Bank Alfalah vs. Century Insurance | Bank Alfalah vs. Habib Insurance |
| Hi Tech vs. Masood Textile Mills | Hi Tech vs. Fauji Foods | Hi Tech vs. KSB Pumps | Hi Tech vs. Mari Petroleum |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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