Correlation Between Gul Ahmed and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Gul Ahmed and Habib Bank 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 Gul Ahmed and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gul Ahmed Textile and Habib Bank, you can compare the effects of market volatilities on Gul Ahmed and Habib Bank 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 Gul Ahmed with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gul Ahmed and Habib Bank.
Diversification Opportunities for Gul Ahmed and Habib Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gul and Habib is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gul Ahmed Textile and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Gul Ahmed 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 Gul Ahmed Textile are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Gul Ahmed i.e., Gul Ahmed and Habib Bank go up and down completely randomly.
Pair Corralation between Gul Ahmed and Habib Bank
Assuming the 90 days trading horizon Gul Ahmed is expected to generate 2.61 times less return on investment than Habib Bank. In addition to that, Gul Ahmed is 1.09 times more volatile than Habib Bank. It trades about 0.06 of its total potential returns per unit of risk. Habib Bank is currently generating about 0.18 per unit of volatility. If you would invest 16,020 in Habib Bank on October 24, 2024 and sell it today you would earn a total of 1,367 from holding Habib Bank or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Gul Ahmed Textile vs. Habib Bank
Performance |
| Timeline |
| Gul Ahmed Textile |
| Habib Bank |
Gul Ahmed and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gul Ahmed and Habib Bank
The main advantage of trading using opposite Gul Ahmed and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gul Ahmed position performs unexpectedly, Habib Bank 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 Bank will offset losses from the drop in Habib Bank's long position.| Gul Ahmed vs. Crescent Star Insurance | Gul Ahmed vs. Habib Insurance | Gul Ahmed vs. Pakistan Telecommunication | Gul Ahmed vs. Pak Datacom |
| Habib Bank vs. Invest Capital Investment | Habib Bank vs. Pakistan Aluminium Beverage | Habib Bank vs. JS Investments | Habib Bank vs. Unilever Pakistan 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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