Correlation Between Habib Insurance and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and KSB Pumps 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 KSB Pumps into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and KSB Pumps, you can compare the effects of market volatilities on Habib Insurance and KSB Pumps 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 KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and KSB Pumps.
Diversification Opportunities for Habib Insurance and KSB Pumps
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Habib and KSB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps 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 KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of Habib Insurance i.e., Habib Insurance and KSB Pumps go up and down completely randomly.
Pair Corralation between Habib Insurance and KSB Pumps
Assuming the 90 days trading horizon Habib Insurance is expected to generate 1.89 times more return on investment than KSB Pumps. However, Habib Insurance is 1.89 times more volatile than KSB Pumps. It trades about 0.22 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.15 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habib Insurance vs. KSB Pumps
Performance |
| Timeline |
| Habib Insurance |
| KSB Pumps |
Habib Insurance and KSB Pumps Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and KSB Pumps
The main advantage of trading using opposite Habib Insurance and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.| Habib Insurance vs. JS Bank | Habib Insurance vs. Century Insurance | Habib Insurance vs. Bank of Punjab | Habib Insurance vs. Soneri Bank |
| KSB Pumps vs. Atlas Insurance | KSB Pumps vs. Habib Insurance | KSB Pumps vs. Askari General Insurance | KSB Pumps vs. Reliance Insurance Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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