Correlation Between Habib Insurance and Ghandhara Automobile
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Ghandhara Automobile 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 Ghandhara Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Ghandhara Automobile, you can compare the effects of market volatilities on Habib Insurance and Ghandhara Automobile 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 Ghandhara Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Ghandhara Automobile.
Diversification Opportunities for Habib Insurance and Ghandhara Automobile
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Habib and Ghandhara is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Ghandhara Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghandhara Automobile 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 Ghandhara Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghandhara Automobile has no effect on the direction of Habib Insurance i.e., Habib Insurance and Ghandhara Automobile go up and down completely randomly.
Pair Corralation between Habib Insurance and Ghandhara Automobile
Assuming the 90 days trading horizon Habib Insurance is expected to generate 2.61 times less return on investment than Ghandhara Automobile. But when comparing it to its historical volatility, Habib Insurance is 1.01 times less risky than Ghandhara Automobile. It trades about 0.07 of its potential returns per unit of risk. Ghandhara Automobile is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,338 in Ghandhara Automobile on November 5, 2024 and sell it today you would earn a total of 43,466 from holding Ghandhara Automobile or generate 1302.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.84% |
| Values | Daily Returns |
Habib Insurance vs. Ghandhara Automobile
Performance |
| Timeline |
| Habib Insurance |
| Ghandhara Automobile |
Habib Insurance and Ghandhara Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Ghandhara Automobile
The main advantage of trading using opposite Habib Insurance and Ghandhara Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Ghandhara Automobile 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 Ghandhara Automobile will offset losses from the drop in Ghandhara Automobile's long position.| Habib Insurance vs. Nimir Industrial Chemical | Habib Insurance vs. Aisha Steel Mills | Habib Insurance vs. Pakistan Tobacco | Habib Insurance vs. Oil and Gas |
| Ghandhara Automobile vs. Air Link Communication | Ghandhara Automobile vs. JS Investments | Ghandhara Automobile vs. Data Agro | Ghandhara Automobile vs. International Steels |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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