Correlation Between Century Insurance and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Habib 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 Century Insurance and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Habib Insurance, you can compare the effects of market volatilities on Century Insurance and Habib 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 Century Insurance with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Habib Insurance.
Diversification Opportunities for Century Insurance and Habib Insurance
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Century and Habib is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Century Insurance 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 Century Insurance are associated (or correlated) with Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of Century Insurance i.e., Century Insurance and Habib Insurance go up and down completely randomly.
Pair Corralation between Century Insurance and Habib Insurance
Assuming the 90 days trading horizon Century Insurance is expected to generate 3.26 times less return on investment than Habib Insurance. But when comparing it to its historical volatility, Century Insurance is 5.47 times less risky than Habib Insurance. It trades about 0.37 of its potential returns per unit of risk. Habib Insurance is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 750.00 in Habib Insurance on October 21, 2024 and sell it today you would earn a total of 150.00 from holding Habib Insurance or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Century Insurance vs. Habib Insurance
Performance |
| Timeline |
| Century Insurance |
| Habib Insurance |
Century Insurance and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Habib Insurance
The main advantage of trading using opposite Century Insurance and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Habib 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 Habib Insurance will offset losses from the drop in Habib Insurance's long position.| Century Insurance vs. Synthetic Products Enterprises | Century Insurance vs. Ittehad Chemicals | Century Insurance vs. Askari Bank | Century Insurance vs. Pakistan Tobacco |
| Habib Insurance vs. JS Bank | Habib Insurance vs. Century Insurance | Habib Insurance vs. Bank of Punjab | Habib Insurance vs. Soneri 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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