Correlation Between Habib Insurance and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Bank of Punjab 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 of Punjab 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 of Punjab, you can compare the effects of market volatilities on Habib Insurance and Bank of Punjab 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 of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Bank of Punjab.
Diversification Opportunities for Habib Insurance and Bank of Punjab
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Habib and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab 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 of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Habib Insurance i.e., Habib Insurance and Bank of Punjab go up and down completely randomly.
Pair Corralation between Habib Insurance and Bank of Punjab
Assuming the 90 days trading horizon Habib Insurance is expected to generate 6.34 times less return on investment than Bank of Punjab. But when comparing it to its historical volatility, Habib Insurance is 1.16 times less risky than Bank of Punjab. It trades about 0.07 of its potential returns per unit of risk. Bank of Punjab is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 553.00 in Bank of Punjab on August 30, 2024 and sell it today you would earn a total of 232.00 from holding Bank of Punjab or generate 41.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Habib Insurance vs. Bank of Punjab
Performance |
| Timeline |
| Habib Insurance |
| Bank of Punjab |
Habib Insurance and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Bank of Punjab
The main advantage of trading using opposite Habib Insurance and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Bank of Punjab 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 of Punjab will offset losses from the drop in Bank of Punjab's long position.| Habib Insurance vs. Masood Textile Mills | Habib Insurance vs. Fauji Foods | Habib Insurance vs. KSB Pumps | Habib Insurance vs. Mari Petroleum |
| Bank of Punjab vs. Masood Textile Mills | Bank of Punjab vs. Fauji Foods | Bank of Punjab vs. KSB Pumps | Bank of Punjab 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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