Correlation Between Habib Insurance and Pace Pakistan
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Pace Pakistan 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 Pace Pakistan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Pace Pakistan, you can compare the effects of market volatilities on Habib Insurance and Pace Pakistan 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 Pace Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Pace Pakistan.
Diversification Opportunities for Habib Insurance and Pace Pakistan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Habib and Pace is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Pace Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Pakistan 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 Pace Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Pakistan has no effect on the direction of Habib Insurance i.e., Habib Insurance and Pace Pakistan go up and down completely randomly.
Pair Corralation between Habib Insurance and Pace Pakistan
Assuming the 90 days trading horizon Habib Insurance is expected to generate 1.13 times more return on investment than Pace Pakistan. However, Habib Insurance is 1.13 times more volatile than Pace Pakistan. It trades about -0.02 of its potential returns per unit of risk. Pace Pakistan is currently generating about -0.27 per unit of risk. If you would invest 915.00 in Habib Insurance on November 7, 2024 and sell it today you would lose (20.00) from holding Habib Insurance or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habib Insurance vs. Pace Pakistan
Performance |
| Timeline |
| Habib Insurance |
| Pace Pakistan |
Habib Insurance and Pace Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Pace Pakistan
The main advantage of trading using opposite Habib Insurance and Pace Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Pace Pakistan 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 Pace Pakistan will offset losses from the drop in Pace Pakistan's long position.| Habib Insurance vs. Apna Microfinance Bank | Habib Insurance vs. ITTEFAQ Iron Industries | Habib Insurance vs. Agha Steel Industries | Habib Insurance vs. IGI Life Insurance |
| Pace Pakistan vs. Unity Foods | Pace Pakistan vs. MCB Bank | Pace Pakistan vs. JS Bank | Pace Pakistan vs. Unilever Pakistan Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
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