Correlation Between Habib Insurance and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Gatron Industries 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 Gatron Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Gatron Industries, you can compare the effects of market volatilities on Habib Insurance and Gatron Industries 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 Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Gatron Industries.
Diversification Opportunities for Habib Insurance and Gatron Industries
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Habib and Gatron is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries 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 Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of Habib Insurance i.e., Habib Insurance and Gatron Industries go up and down completely randomly.
Pair Corralation between Habib Insurance and Gatron Industries
Assuming the 90 days trading horizon Habib Insurance is expected to generate 3.67 times more return on investment than Gatron Industries. However, Habib Insurance is 3.67 times more volatile than Gatron Industries. It trades about 0.22 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.23 per unit of risk. If you would invest 750.00 in Habib Insurance on October 21, 2024 and sell it today you would earn a total of 150.00 from holding Habib Insurance or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habib Insurance vs. Gatron Industries
Performance |
| Timeline |
| Habib Insurance |
| Gatron Industries |
Habib Insurance and Gatron Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Gatron Industries
The main advantage of trading using opposite Habib Insurance and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.| Habib Insurance vs. JS Bank | Habib Insurance vs. Century Insurance | Habib Insurance vs. Bank of Punjab | Habib Insurance vs. Soneri Bank |
| Gatron Industries vs. Nimir Industrial Chemical | Gatron Industries vs. Hi Tech Lubricants | Gatron Industries vs. Atlas Insurance | Gatron Industries vs. Pakistan Telecommunication |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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