Correlation Between Habib Insurance and Frontier Ceramics
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Frontier Ceramics 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 Frontier Ceramics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Frontier Ceramics, you can compare the effects of market volatilities on Habib Insurance and Frontier Ceramics 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 Frontier Ceramics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Frontier Ceramics.
Diversification Opportunities for Habib Insurance and Frontier Ceramics
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Habib and Frontier is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Frontier Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Ceramics 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 Frontier Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Ceramics has no effect on the direction of Habib Insurance i.e., Habib Insurance and Frontier Ceramics go up and down completely randomly.
Pair Corralation between Habib Insurance and Frontier Ceramics
Assuming the 90 days trading horizon Habib Insurance is expected to generate 0.74 times more return on investment than Frontier Ceramics. However, Habib Insurance is 1.35 times less risky than Frontier Ceramics. It trades about 0.21 of its potential returns per unit of risk. Frontier Ceramics is currently generating about 0.08 per unit of risk. If you would invest 628.00 in Habib Insurance on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Habib Insurance or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Habib Insurance vs. Frontier Ceramics
Performance |
| Timeline |
| Habib Insurance |
| Frontier Ceramics |
Habib Insurance and Frontier Ceramics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Frontier Ceramics
The main advantage of trading using opposite Habib Insurance and Frontier Ceramics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Frontier Ceramics 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 Frontier Ceramics will offset losses from the drop in Frontier Ceramics' long position.| Habib Insurance vs. Habib Bank | Habib Insurance vs. National Bank of | Habib Insurance vs. United Bank | Habib Insurance vs. MCB Bank |
| Frontier Ceramics vs. Habib Insurance | Frontier Ceramics vs. Reliance Insurance Co | Frontier Ceramics vs. Orient Rental Modaraba | Frontier Ceramics vs. Ghandhara Automobile |
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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