Correlation Between Bank Islami and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Islami and Century 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 Islami and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Islami Pakistan and Century Insurance, you can compare the effects of market volatilities on Bank Islami and Century 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 Islami with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Islami and Century Insurance.
Diversification Opportunities for Bank Islami and Century Insurance
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Century is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Islami Pakistan and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and Bank Islami 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 Islami Pakistan are associated (or correlated) with Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Bank Islami i.e., Bank Islami and Century Insurance go up and down completely randomly.
Pair Corralation between Bank Islami and Century Insurance
Assuming the 90 days trading horizon Bank Islami is expected to generate 2.97 times less return on investment than Century Insurance. In addition to that, Bank Islami is 1.11 times more volatile than Century Insurance. It trades about 0.09 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.31 per unit of volatility. If you would invest 3,098 in Century Insurance on August 31, 2024 and sell it today you would earn a total of 525.00 from holding Century Insurance or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank Islami Pakistan vs. Century Insurance
Performance |
| Timeline |
| Bank Islami Pakistan |
| Century Insurance |
Bank Islami and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Islami and Century Insurance
The main advantage of trading using opposite Bank Islami and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Islami position performs unexpectedly, Century 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Bank Islami vs. Crescent Steel Allied | Bank Islami vs. Agha Steel Industries | Bank Islami vs. Crescent Star Insurance | Bank Islami vs. ITTEFAQ Iron Industries |
| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |