Correlation Between Habib Bank and Ghani Glass
Can any of the company-specific risk be diversified away by investing in both Habib Bank and Ghani Glass 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 Habib Bank and Ghani Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Bank and Ghani Glass, you can compare the effects of market volatilities on Habib Bank and Ghani Glass 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 Habib Bank with a short position of Ghani Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Bank and Ghani Glass.
Diversification Opportunities for Habib Bank and Ghani Glass
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Habib and Ghani is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Habib Bank and Ghani Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Glass and Habib 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 Habib Bank are associated (or correlated) with Ghani Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Glass has no effect on the direction of Habib Bank i.e., Habib Bank and Ghani Glass go up and down completely randomly.
Pair Corralation between Habib Bank and Ghani Glass
Assuming the 90 days trading horizon Habib Bank is expected to generate 0.87 times more return on investment than Ghani Glass. However, Habib Bank is 1.14 times less risky than Ghani Glass. It trades about 0.34 of its potential returns per unit of risk. Ghani Glass is currently generating about 0.27 per unit of risk. If you would invest 12,744 in Habib Bank on September 12, 2024 and sell it today you would earn a total of 3,670 from holding Habib Bank or generate 28.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habib Bank vs. Ghani Glass
Performance |
| Timeline |
| Habib Bank |
| Ghani Glass |
Habib Bank and Ghani Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Bank and Ghani Glass
The main advantage of trading using opposite Habib Bank and Ghani Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Bank position performs unexpectedly, Ghani Glass 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 Ghani Glass will offset losses from the drop in Ghani Glass' long position.| Habib Bank vs. JS Investments | Habib Bank vs. Avanceon | Habib Bank vs. Hi Tech Lubricants | Habib Bank vs. Air Link Communication |
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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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