Correlation Between Habib Bank and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both Habib Bank and Premier 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 Habib Bank and Premier Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Bank and Premier Insurance, you can compare the effects of market volatilities on Habib Bank and Premier 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 Habib Bank with a short position of Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Bank and Premier Insurance.
Diversification Opportunities for Habib Bank and Premier Insurance
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Habib and Premier is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Habib Bank and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance 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 Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Habib Bank i.e., Habib Bank and Premier Insurance go up and down completely randomly.
Pair Corralation between Habib Bank and Premier Insurance
Assuming the 90 days trading horizon Habib Bank is expected to generate 0.77 times more return on investment than Premier Insurance. However, Habib Bank is 1.29 times less risky than Premier Insurance. It trades about 0.27 of its potential returns per unit of risk. Premier Insurance is currently generating about -0.08 per unit of risk. If you would invest 13,977 in Habib Bank on August 30, 2024 and sell it today you would earn a total of 3,019 from holding Habib Bank or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
Habib Bank vs. Premier Insurance
Performance |
| Timeline |
| Habib Bank |
| Premier Insurance |
Habib Bank and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Bank and Premier Insurance
The main advantage of trading using opposite Habib Bank and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Bank position performs unexpectedly, Premier 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| Habib Bank vs. Masood Textile Mills | Habib Bank vs. Fauji Foods | Habib Bank vs. KSB Pumps | Habib Bank vs. Mari Petroleum |
| Premier Insurance vs. Masood Textile Mills | Premier Insurance vs. Fauji Foods | Premier Insurance vs. KSB Pumps | Premier 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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