Correlation Between Bank Alfalah and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah and TPL 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 Bank Alfalah and TPL Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and TPL Insurance, you can compare the effects of market volatilities on Bank Alfalah and TPL 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 Bank Alfalah with a short position of TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and TPL Insurance.
Diversification Opportunities for Bank Alfalah and TPL Insurance
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and TPL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Insurance 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 TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of Bank Alfalah i.e., Bank Alfalah and TPL Insurance go up and down completely randomly.
Pair Corralation between Bank Alfalah and TPL Insurance
Assuming the 90 days trading horizon Bank Alfalah is expected to generate 0.81 times more return on investment than TPL Insurance. However, Bank Alfalah is 1.24 times less risky than TPL Insurance. It trades about 0.13 of its potential returns per unit of risk. TPL Insurance is currently generating about -0.08 per unit of risk. If you would invest 5,697 in Bank Alfalah on September 2, 2024 and sell it today you would earn a total of 2,492 from holding Bank Alfalah or generate 43.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.75% |
| Values | Daily Returns |
Bank Alfalah vs. TPL Insurance
Performance |
| Timeline |
| Bank Alfalah |
| TPL Insurance |
Bank Alfalah and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Alfalah and TPL Insurance
The main advantage of trading using opposite Bank Alfalah and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah position performs unexpectedly, TPL 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 TPL Insurance will offset losses from the drop in TPL Insurance's long position.| Bank Alfalah vs. Murree Brewery | Bank Alfalah vs. Ghandhara Automobile | Bank Alfalah vs. Atlas Insurance | Bank Alfalah vs. Century Insurance |
| TPL Insurance vs. Jubilee Life Insurance | TPL Insurance vs. Big Bird Foods | TPL Insurance vs. Shaheen Insurance | TPL Insurance vs. Atlas 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Correlations Find global opportunities by holding instruments from different markets |