Correlation Between Hi Tech and United Insurance
Can any of the company-specific risk be diversified away by investing in both Hi Tech and United Insurance 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 United Insurance 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 United Insurance, you can compare the effects of market volatilities on Hi Tech and United Insurance 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and United Insurance.
Diversification Opportunities for Hi Tech and United Insurance
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between HTL and United is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of Hi Tech i.e., Hi Tech and United Insurance go up and down completely randomly.
Pair Corralation between Hi Tech and United Insurance
Assuming the 90 days trading horizon Hi Tech is expected to generate 2.81 times less return on investment than United Insurance. In addition to that, Hi Tech is 1.07 times more volatile than United Insurance. It trades about 0.04 of its total potential returns per unit of risk. United Insurance is currently generating about 0.12 per unit of volatility. If you would invest 443.00 in United Insurance on August 28, 2024 and sell it today you would earn a total of 1,132 from holding United Insurance or generate 255.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.98% |
| Values | Daily Returns |
Hi Tech Lubricants vs. United Insurance
Performance |
| Timeline |
| Hi Tech Lubricants |
| United Insurance |
Hi Tech and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and United Insurance
The main advantage of trading using opposite Hi Tech and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| Hi Tech vs. Al Ghazi Tractors | Hi Tech vs. Shell Pakistan | Hi Tech vs. Nestle Pakistan | Hi Tech vs. Hinopak Motors |
| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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