Correlation Between Ghandhara Automobile and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile 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 Ghandhara Automobile and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Habib Insurance, you can compare the effects of market volatilities on Ghandhara Automobile 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 Ghandhara Automobile with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Habib Insurance.
Diversification Opportunities for Ghandhara Automobile and Habib Insurance
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ghandhara and Habib is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Ghandhara Automobile 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 Ghandhara Automobile 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 Ghandhara Automobile i.e., Ghandhara Automobile and Habib Insurance go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Habib Insurance
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 1.01 times more return on investment than Habib Insurance. However, Ghandhara Automobile is 1.01 times more volatile than Habib Insurance. It trades about 0.17 of its potential returns per unit of risk. Habib Insurance is currently generating about 0.07 per unit of risk. If you would invest 3,338 in Ghandhara Automobile on November 5, 2024 and sell it today you would earn a total of 43,466 from holding Ghandhara Automobile or generate 1302.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.84% |
| Values | Daily Returns |
Ghandhara Automobile vs. Habib Insurance
Performance |
| Timeline |
| Ghandhara Automobile |
| Habib Insurance |
Ghandhara Automobile and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Habib Insurance
The main advantage of trading using opposite Ghandhara Automobile and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile 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.| Ghandhara Automobile vs. Air Link Communication | Ghandhara Automobile vs. JS Investments | Ghandhara Automobile vs. Data Agro | Ghandhara Automobile vs. International Steels |
| Habib Insurance vs. Nimir Industrial Chemical | Habib Insurance vs. Aisha Steel Mills | Habib Insurance vs. Pakistan Tobacco | Habib Insurance vs. Oil and Gas |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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