Correlation Between Habib Bank and Reliance Insurance
Can any of the company-specific risk be diversified away by investing in both Habib Bank and Reliance 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 Reliance 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 Reliance Insurance Co, you can compare the effects of market volatilities on Habib Bank and Reliance 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 Reliance Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Bank and Reliance Insurance.
Diversification Opportunities for Habib Bank and Reliance Insurance
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Habib and Reliance is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Habib Bank and Reliance Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance 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 Reliance Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Insurance has no effect on the direction of Habib Bank i.e., Habib Bank and Reliance Insurance go up and down completely randomly.
Pair Corralation between Habib Bank and Reliance Insurance
Assuming the 90 days trading horizon Habib Bank is expected to generate 1.62 times less return on investment than Reliance Insurance. But when comparing it to its historical volatility, Habib Bank is 2.37 times less risky than Reliance Insurance. It trades about 0.12 of its potential returns per unit of risk. Reliance Insurance Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 673.00 in Reliance Insurance Co on August 25, 2024 and sell it today you would earn a total of 527.00 from holding Reliance Insurance Co or generate 78.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.43% |
| Values | Daily Returns |
Habib Bank vs. Reliance Insurance Co
Performance |
| Timeline |
| Habib Bank |
| Reliance Insurance |
Habib Bank and Reliance Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Bank and Reliance Insurance
The main advantage of trading using opposite Habib Bank and Reliance Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Bank position performs unexpectedly, Reliance 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 Reliance Insurance will offset losses from the drop in Reliance Insurance's long position.| Habib Bank vs. Matco Foods | Habib Bank vs. IBL HealthCare | Habib Bank vs. Nimir Industrial Chemical | Habib Bank vs. Shaheen Insurance |
| Reliance Insurance vs. Habib Bank | Reliance Insurance vs. National Bank of | Reliance Insurance vs. United Bank | Reliance Insurance vs. MCB Bank |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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