Correlation Between Century Insurance and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Khyber Tobacco 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 Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Khyber Tobacco, you can compare the effects of market volatilities on Century Insurance and Khyber Tobacco 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 Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Khyber Tobacco.
Diversification Opportunities for Century Insurance and Khyber Tobacco
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Khyber is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco 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 Khyber Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khyber Tobacco has no effect on the direction of Century Insurance i.e., Century Insurance and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Century Insurance and Khyber Tobacco
Assuming the 90 days trading horizon Century Insurance is expected to generate 0.48 times more return on investment than Khyber Tobacco. However, Century Insurance is 2.07 times less risky than Khyber Tobacco. It trades about 0.46 of its potential returns per unit of risk. Khyber Tobacco is currently generating about -0.37 per unit of risk. If you would invest 3,010 in Century Insurance on September 3, 2024 and sell it today you would earn a total of 734.00 from holding Century Insurance or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Century Insurance vs. Khyber Tobacco
Performance |
| Timeline |
| Century Insurance |
| Khyber Tobacco |
Century Insurance and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Khyber Tobacco
The main advantage of trading using opposite Century Insurance and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Khyber Tobacco 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 Khyber Tobacco will offset losses from the drop in Khyber Tobacco's long position.| Century Insurance vs. Oil and Gas | Century Insurance vs. Pakistan State Oil | Century Insurance vs. Pakistan Petroleum | Century Insurance vs. Fauji Fertilizer |
| Khyber Tobacco vs. Habib Insurance | Khyber Tobacco vs. Pakistan Refinery | Khyber Tobacco vs. Century Insurance | Khyber Tobacco vs. Al Khair Gadoon Limited |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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