Correlation Between Ghandhara Automobile and Habib Metropolitan
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Habib Metropolitan 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 Metropolitan 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 Metropolitan Bank, you can compare the effects of market volatilities on Ghandhara Automobile and Habib Metropolitan 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 Metropolitan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Habib Metropolitan.
Diversification Opportunities for Ghandhara Automobile and Habib Metropolitan
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ghandhara and Habib is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Habib Metropolitan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Metropolitan Bank 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 Metropolitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Metropolitan Bank has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Habib Metropolitan go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Habib Metropolitan
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 1.38 times less return on investment than Habib Metropolitan. In addition to that, Ghandhara Automobile is 1.36 times more volatile than Habib Metropolitan Bank. It trades about 0.16 of its total potential returns per unit of risk. Habib Metropolitan Bank is currently generating about 0.31 per unit of volatility. If you would invest 7,106 in Habib Metropolitan Bank on September 14, 2024 and sell it today you would earn a total of 1,549 from holding Habib Metropolitan Bank or generate 21.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ghandhara Automobile vs. Habib Metropolitan Bank
Performance |
| Timeline |
| Ghandhara Automobile |
| Habib Metropolitan Bank |
Ghandhara Automobile and Habib Metropolitan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Habib Metropolitan
The main advantage of trading using opposite Ghandhara Automobile and Habib Metropolitan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Habib Metropolitan 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 Metropolitan will offset losses from the drop in Habib Metropolitan's long position.| Ghandhara Automobile vs. Habib Insurance | Ghandhara Automobile vs. Century Insurance | Ghandhara Automobile vs. Reliance Weaving Mills | Ghandhara Automobile vs. Media Times |
| Habib Metropolitan vs. Pakistan Hotel Developers | Habib Metropolitan vs. Beco Steel | Habib Metropolitan vs. Oil and Gas | Habib Metropolitan vs. International Steels |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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