Correlation Between Hi Tech and National Bank
Can any of the company-specific risk be diversified away by investing in both Hi Tech and National Bank 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 Hi Tech and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and National Bank of, you can compare the effects of market volatilities on Hi Tech and National Bank 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 Hi Tech with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and National Bank.
Diversification Opportunities for Hi Tech and National Bank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between HTL and National is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Hi Tech 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 Hi Tech Lubricants are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Hi Tech i.e., Hi Tech and National Bank go up and down completely randomly.
Pair Corralation between Hi Tech and National Bank
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to under-perform the National Bank. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Lubricants is 1.52 times less risky than National Bank. The stock trades about -0.05 of its potential returns per unit of risk. The National Bank of is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,329 in National Bank of on November 27, 2024 and sell it today you would earn a total of 1,111 from holding National Bank of or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. National Bank of
Performance |
| Timeline |
| Hi Tech Lubricants |
| National Bank |
Hi Tech and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and National Bank
The main advantage of trading using opposite Hi Tech and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Hi Tech vs. Soneri Bank | Hi Tech vs. Wah Nobel Chemicals | Hi Tech vs. EFU General Insurance | Hi Tech vs. IGI Life Insurance |
| National Bank vs. Pakistan Telecommunication | National Bank vs. Atlas Insurance | National Bank vs. Standard Chartered Bank | National Bank vs. Century 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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