Correlation Between Hub Power and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Hub Power and Habib 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 Hub Power and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Power and Habib Bank, you can compare the effects of market volatilities on Hub Power and Habib 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 Hub Power with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub Power and Habib Bank.
Diversification Opportunities for Hub Power and Habib Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hub and Habib is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Hub Power 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 Hub Power are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Hub Power i.e., Hub Power and Habib Bank go up and down completely randomly.
Pair Corralation between Hub Power and Habib Bank
Assuming the 90 days trading horizon Hub Power is expected to generate 1.58 times less return on investment than Habib Bank. But when comparing it to its historical volatility, Hub Power is 1.02 times less risky than Habib Bank. It trades about 0.1 of its potential returns per unit of risk. Habib Bank is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,850 in Habib Bank on September 1, 2024 and sell it today you would earn a total of 12,250 from holding Habib Bank or generate 209.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Power vs. Habib Bank
Performance |
| Timeline |
| Hub Power |
| Habib Bank |
Hub Power and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub Power and Habib Bank
The main advantage of trading using opposite Hub Power and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Power position performs unexpectedly, Habib 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 Habib Bank will offset losses from the drop in Habib Bank's long position.| Hub Power vs. Honda Atlas Cars | Hub Power vs. Century Insurance | Hub Power vs. Faysal Bank | Hub Power vs. Crescent Star Insurance |
| Habib Bank vs. WorldCall Telecom | Habib Bank vs. Shaheen Insurance | Habib Bank vs. National Foods | Habib Bank vs. Matco Foods |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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