Correlation Between Habib Insurance and Shell Pakistan
Can any of the company-specific risk be diversified away by investing in both Habib Insurance and Shell 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 Shell 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 Shell Pakistan, you can compare the effects of market volatilities on Habib Insurance and Shell 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 Shell Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Shell Pakistan.
Diversification Opportunities for Habib Insurance and Shell Pakistan
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Habib and Shell is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Shell Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell 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 Shell Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell Pakistan has no effect on the direction of Habib Insurance i.e., Habib Insurance and Shell Pakistan go up and down completely randomly.
Pair Corralation between Habib Insurance and Shell Pakistan
Assuming the 90 days trading horizon Habib Insurance is expected to generate 1.92 times more return on investment than Shell Pakistan. However, Habib Insurance is 1.92 times more volatile than Shell Pakistan. It trades about 0.08 of its potential returns per unit of risk. Shell Pakistan is currently generating about 0.08 per unit of risk. If you would invest 472.00 in Habib Insurance on September 12, 2024 and sell it today you would earn a total of 402.00 from holding Habib Insurance or generate 85.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.23% |
| Values | Daily Returns |
Habib Insurance vs. Shell Pakistan
Performance |
| Timeline |
| Habib Insurance |
| Shell Pakistan |
Habib Insurance and Shell Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Insurance and Shell Pakistan
The main advantage of trading using opposite Habib Insurance and Shell Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Insurance position performs unexpectedly, Shell 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 Shell Pakistan will offset losses from the drop in Shell Pakistan's long position.| Habib Insurance vs. Masood Textile Mills | Habib Insurance vs. Fauji Foods | Habib Insurance vs. KSB Pumps | Habib Insurance vs. Mari Petroleum |
| Shell Pakistan vs. Habib Insurance | Shell Pakistan vs. Security Investment Bank | Shell Pakistan vs. Pakistan Telecommunication | Shell Pakistan vs. TPL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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