Correlation Between Frontier Ceramics and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Frontier Ceramics 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 Frontier Ceramics and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Ceramics and Habib Insurance, you can compare the effects of market volatilities on Frontier Ceramics 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 Frontier Ceramics with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Ceramics and Habib Insurance.
Diversification Opportunities for Frontier Ceramics and Habib Insurance
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Frontier and Habib is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Ceramics and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Frontier Ceramics 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 Frontier Ceramics 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 Frontier Ceramics i.e., Frontier Ceramics and Habib Insurance go up and down completely randomly.
Pair Corralation between Frontier Ceramics and Habib Insurance
Assuming the 90 days trading horizon Frontier Ceramics is expected to under-perform the Habib Insurance. In addition to that, Frontier Ceramics is 1.31 times more volatile than Habib Insurance. It trades about -0.06 of its total potential returns per unit of risk. Habib Insurance is currently generating about 0.07 per unit of volatility. If you would invest 628.00 in Habib Insurance on August 30, 2024 and sell it today you would earn a total of 24.00 from holding Habib Insurance or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Ceramics vs. Habib Insurance
Performance |
| Timeline |
| Frontier Ceramics |
| Habib Insurance |
Frontier Ceramics and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Ceramics and Habib Insurance
The main advantage of trading using opposite Frontier Ceramics and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Ceramics 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.| Frontier Ceramics vs. 786 Investment Limited | Frontier Ceramics vs. Atlas Insurance | Frontier Ceramics vs. Reliance Insurance Co | Frontier Ceramics vs. ORIX Leasing Pakistan |
| Habib Insurance vs. Masood Textile Mills | Habib Insurance vs. Fauji Foods | Habib Insurance vs. KSB Pumps | Habib Insurance vs. Mari Petroleum |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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