Correlation Between Faysal Bank and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Faysal Bank and Adamjee 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 Faysal Bank and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faysal Bank and Adamjee Insurance, you can compare the effects of market volatilities on Faysal Bank and Adamjee 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 Faysal Bank with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faysal Bank and Adamjee Insurance.
Diversification Opportunities for Faysal Bank and Adamjee Insurance
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Faysal and Adamjee is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Faysal Bank and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Faysal Bank 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 Faysal Bank are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Faysal Bank i.e., Faysal Bank and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Faysal Bank and Adamjee Insurance
Assuming the 90 days trading horizon Faysal Bank is expected to generate 1.1 times more return on investment than Adamjee Insurance. However, Faysal Bank is 1.1 times more volatile than Adamjee Insurance. It trades about 0.11 of its potential returns per unit of risk. Adamjee Insurance is currently generating about 0.08 per unit of risk. If you would invest 2,743 in Faysal Bank on November 3, 2024 and sell it today you would earn a total of 2,276 from holding Faysal Bank or generate 82.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.18% |
| Values | Daily Returns |
Faysal Bank vs. Adamjee Insurance
Performance |
| Timeline |
| Faysal Bank |
| Adamjee Insurance |
Faysal Bank and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faysal Bank and Adamjee Insurance
The main advantage of trading using opposite Faysal Bank and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faysal Bank position performs unexpectedly, Adamjee 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Faysal Bank vs. National Bank of | Faysal Bank vs. Pakistan Tobacco | Faysal Bank vs. Air Link Communication | Faysal Bank vs. EFU General Insurance |
| Adamjee Insurance vs. Allied Bank | Adamjee Insurance vs. Nimir Industrial Chemical | Adamjee Insurance vs. Century Insurance | Adamjee Insurance vs. Data Agro |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |