Correlation Between Habib Insurance and Pakistan International
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Pakistan International 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 Pakistan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Insurance and Pakistan International Bulk, you can compare the effects of market volatilities on Habib Insurance and Pakistan International 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 Pakistan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Pakistan International.
Diversification Opportunities for Habib Insurance and Pakistan International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Habib and Pakistan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Pakistan International Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan International 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 Pakistan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan International has no effect on the direction of Habib Insurance i.e., Habib Insurance and Pakistan International go up and down completely randomly.
Pair Corralation between Habib Insurance and Pakistan International
Assuming the 90 days trading horizon Habib Insurance is expected to generate 1.49 times more return on investment than Pakistan International. However, Habib Insurance is 1.49 times more volatile than Pakistan International Bulk. It trades about 0.16 of its potential returns per unit of risk. Pakistan International Bulk is currently generating about 0.04 per unit of risk. If you would invest 797.00 in Habib Insurance on October 25, 2024 and sell it today you would earn a total of 116.00 from holding Habib Insurance or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Habib Insurance vs. Pakistan International Bulk
Performance |
| Timeline |
| Habib Insurance |
| Pakistan International |
Habib Insurance and Pakistan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Pakistan International
The main advantage of trading using opposite Habib Insurance and Pakistan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Pakistan International 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 Pakistan International will offset losses from the drop in Pakistan International's long position.| Habib Insurance vs. Avanceon | Habib Insurance vs. NetSol Technologies | Habib Insurance vs. Sitara Chemical Industries | Habib Insurance vs. Ittehad Chemicals |
| Pakistan International vs. Nimir Industrial Chemical | Pakistan International vs. Pakistan Reinsurance | Pakistan International vs. United Insurance | Pakistan International vs. Jubilee Life Insurance |
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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