Correlation Between Habib Metropolitan and Tata Textile
Can any of the company-specific risk be diversified away by investing in both Habib Metropolitan and Tata Textile 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 Tata Textile 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 Tata Textile Mills, you can compare the effects of market volatilities on Habib Metropolitan and Tata Textile 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 Tata Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Metropolitan and Tata Textile.
Diversification Opportunities for Habib Metropolitan and Tata Textile
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Habib and Tata is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Habib Metropolitan Bank and Tata Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Textile Mills 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 Tata Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Textile Mills has no effect on the direction of Habib Metropolitan i.e., Habib Metropolitan and Tata Textile go up and down completely randomly.
Pair Corralation between Habib Metropolitan and Tata Textile
Assuming the 90 days trading horizon Habib Metropolitan Bank is expected to generate 0.47 times more return on investment than Tata Textile. However, Habib Metropolitan Bank is 2.12 times less risky than Tata Textile. It trades about 0.24 of its potential returns per unit of risk. Tata Textile Mills is currently generating about 0.05 per unit of risk. If you would invest 6,392 in Habib Metropolitan Bank on September 12, 2024 and sell it today you would earn a total of 2,166 from holding Habib Metropolitan Bank or generate 33.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.19% |
| Values | Daily Returns |
Habib Metropolitan Bank vs. Tata Textile Mills
Performance |
| Timeline |
| Habib Metropolitan Bank |
| Tata Textile Mills |
Habib Metropolitan and Tata Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habib Metropolitan and Tata Textile
The main advantage of trading using opposite Habib Metropolitan and Tata Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habib Metropolitan position performs unexpectedly, Tata Textile 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 Tata Textile will offset losses from the drop in Tata Textile's long position.| Habib Metropolitan vs. Big Bird Foods | Habib Metropolitan vs. Pakistan Telecommunication | Habib Metropolitan vs. Reliance Insurance Co | Habib Metropolitan vs. Ghandhara Automobile |
| Tata Textile vs. Sardar Chemical Industries | Tata Textile vs. Ittehad Chemicals | Tata Textile vs. Orient Rental Modaraba | Tata Textile vs. Nimir Industrial Chemical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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