Correlation Between Habib Insurance and Bank Alfalah
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Bank Alfalah 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 Insurance and Bank Alfalah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Bank Alfalah, you can compare the effects of market volatilities on Habib Insurance and Bank Alfalah 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 Insurance with a short position of Bank Alfalah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Bank Alfalah.
Diversification Opportunities for Habib Insurance and Bank Alfalah
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Habib and Bank is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Bank Alfalah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Alfalah and Habib Insurance 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 Insurance are associated (or correlated) with Bank Alfalah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Alfalah has no effect on the direction of Habib Insurance i.e., Habib Insurance and Bank Alfalah go up and down completely randomly.
Pair Corralation between Habib Insurance and Bank Alfalah
Assuming the 90 days trading horizon Habib Insurance is expected to generate 1.61 times less return on investment than Bank Alfalah. In addition to that, Habib Insurance is 2.16 times more volatile than Bank Alfalah. It trades about 0.04 of its total potential returns per unit of risk. Bank Alfalah is currently generating about 0.14 per unit of volatility. If you would invest 2,313 in Bank Alfalah on September 3, 2024 and sell it today you would earn a total of 5,876 from holding Bank Alfalah or generate 254.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.61% |
| Values | Daily Returns |
Habib Insurance vs. Bank Alfalah
Performance |
| Timeline |
| Habib Insurance |
| Bank Alfalah |
Habib Insurance and Bank Alfalah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Bank Alfalah
The main advantage of trading using opposite Habib Insurance and Bank Alfalah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Bank Alfalah 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 Bank Alfalah will offset losses from the drop in Bank Alfalah's long position.| Habib Insurance vs. Aisha Steel Mills | Habib Insurance vs. Dost Steels | Habib Insurance vs. Pakistan Telecommunication | Habib Insurance vs. East West Insurance |
| Bank Alfalah vs. Reliance Insurance Co | Bank Alfalah vs. Air Link Communication | Bank Alfalah vs. Century Insurance | Bank Alfalah vs. Habib Insurance |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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