Correlation Between Faysal Bank and Hub Power
Can any of the company-specific risk be diversified away by investing in both Faysal Bank and Hub Power 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 Hub Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faysal Bank and Hub Power, you can compare the effects of market volatilities on Faysal Bank and Hub Power 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 Hub Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faysal Bank and Hub Power.
Diversification Opportunities for Faysal Bank and Hub Power
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faysal and Hub is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Faysal Bank and Hub Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Power 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 Hub Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Power has no effect on the direction of Faysal Bank i.e., Faysal Bank and Hub Power go up and down completely randomly.
Pair Corralation between Faysal Bank and Hub Power
Assuming the 90 days trading horizon Faysal Bank is expected to generate 1.09 times more return on investment than Hub Power. However, Faysal Bank is 1.09 times more volatile than Hub Power. It trades about 0.1 of its potential returns per unit of risk. Hub Power is currently generating about -0.04 per unit of risk. If you would invest 3,450 in Faysal Bank on September 3, 2024 and sell it today you would earn a total of 1,303 from holding Faysal Bank or generate 37.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faysal Bank vs. Hub Power
Performance |
| Timeline |
| Faysal Bank |
| Hub Power |
Faysal Bank and Hub Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faysal Bank and Hub Power
The main advantage of trading using opposite Faysal Bank and Hub Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faysal Bank position performs unexpectedly, Hub Power 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 Hub Power will offset losses from the drop in Hub Power's long position.| Faysal Bank vs. EFU General Insurance | Faysal Bank vs. Adamjee Insurance | Faysal Bank vs. Murree Brewery | Faysal Bank vs. Century Insurance |
| Hub Power vs. Security Investment Bank | Hub Power vs. Pakistan Tobacco | Hub Power vs. Crescent Steel Allied | Hub Power vs. Matco Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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