Correlation Between Bank Islami and United Insurance
Can any of the company-specific risk be diversified away by investing in both Bank Islami and United 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 United 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 United Insurance, you can compare the effects of market volatilities on Bank Islami and United 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Islami and United Insurance.
Diversification Opportunities for Bank Islami and United Insurance
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and United is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank Islami Pakistan and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of Bank Islami i.e., Bank Islami and United Insurance go up and down completely randomly.
Pair Corralation between Bank Islami and United Insurance
Assuming the 90 days trading horizon Bank Islami Pakistan is expected to generate 0.88 times more return on investment than United Insurance. However, Bank Islami Pakistan is 1.13 times less risky than United Insurance. It trades about 0.38 of its potential returns per unit of risk. United Insurance is currently generating about -0.28 per unit of risk. If you would invest 2,100 in Bank Islami Pakistan on August 27, 2024 and sell it today you would earn a total of 199.00 from holding Bank Islami Pakistan or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Islami Pakistan vs. United Insurance
Performance |
| Timeline |
| Bank Islami Pakistan |
| United Insurance |
Bank Islami and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Islami and United Insurance
The main advantage of trading using opposite Bank Islami and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Islami position performs unexpectedly, United 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 United Insurance will offset losses from the drop in United Insurance's long position.| Bank Islami vs. Shaheen Insurance | Bank Islami vs. National Bank of | Bank Islami vs. United Insurance | Bank Islami vs. MCB Bank |
| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |