Correlation Between Habib Metropolitan and Bank Alfalah
Can any of the company-specific risk be diversified away by investing in both Habib Metropolitan and Bank Alfalah 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 Metropolitan and Bank Alfalah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habib Metropolitan Bank and Bank Alfalah, you can compare the effects of market volatilities on Habib Metropolitan and Bank Alfalah 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 Metropolitan with a short position of Bank Alfalah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Metropolitan and Bank Alfalah.
Diversification Opportunities for Habib Metropolitan and Bank Alfalah
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Habib and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Habib Metropolitan Bank and Bank Alfalah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Alfalah and Habib Metropolitan 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 Metropolitan Bank are associated (or correlated) with Bank Alfalah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Alfalah has no effect on the direction of Habib Metropolitan i.e., Habib Metropolitan and Bank Alfalah go up and down completely randomly.
Pair Corralation between Habib Metropolitan and Bank Alfalah
Assuming the 90 days trading horizon Habib Metropolitan Bank is expected to generate 0.87 times more return on investment than Bank Alfalah. However, Habib Metropolitan Bank is 1.15 times less risky than Bank Alfalah. It trades about 0.22 of its potential returns per unit of risk. Bank Alfalah is currently generating about 0.16 per unit of risk. If you would invest 2,118 in Habib Metropolitan Bank on August 28, 2024 and sell it today you would earn a total of 5,862 from holding Habib Metropolitan Bank or generate 276.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habib Metropolitan Bank vs. Bank Alfalah
Performance |
| Timeline |
| Habib Metropolitan Bank |
| Bank Alfalah |
Habib Metropolitan and Bank Alfalah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Metropolitan and Bank Alfalah
The main advantage of trading using opposite Habib Metropolitan and Bank Alfalah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Metropolitan position performs unexpectedly, Bank Alfalah 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 Bank Alfalah will offset losses from the drop in Bank Alfalah's long position.| Habib Metropolitan vs. Masood Textile Mills | Habib Metropolitan vs. Fauji Foods | Habib Metropolitan vs. KSB Pumps | Habib Metropolitan vs. Mari Petroleum |
| Bank Alfalah vs. National Bank of | Bank Alfalah vs. Meezan Bank | Bank Alfalah vs. Bank Al Habib | Bank Alfalah vs. Habib Metropolitan Bank |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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