Correlation Between IBL HealthCare and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and Adamjee 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 IBL HealthCare and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Adamjee Insurance, you can compare the effects of market volatilities on IBL HealthCare and Adamjee 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 IBL HealthCare with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Adamjee Insurance.
Diversification Opportunities for IBL HealthCare and Adamjee Insurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBL and Adamjee is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Adamjee Insurance go up and down completely randomly.
Pair Corralation between IBL HealthCare and Adamjee Insurance
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 1.28 times more return on investment than Adamjee Insurance. However, IBL HealthCare is 1.28 times more volatile than Adamjee Insurance. It trades about 0.06 of its potential returns per unit of risk. Adamjee Insurance is currently generating about 0.03 per unit of risk. If you would invest 4,032 in IBL HealthCare on October 25, 2024 and sell it today you would earn a total of 127.00 from holding IBL HealthCare or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBL HealthCare vs. Adamjee Insurance
Performance |
| Timeline |
| IBL HealthCare |
| Adamjee Insurance |
IBL HealthCare and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Adamjee Insurance
The main advantage of trading using opposite IBL HealthCare and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, Adamjee 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| IBL HealthCare vs. Wah Nobel Chemicals | IBL HealthCare vs. Hi Tech Lubricants | IBL HealthCare vs. Ittehad Chemicals | IBL HealthCare vs. Orient Rental Modaraba |
| Adamjee Insurance vs. Pak Datacom | Adamjee Insurance vs. Universal Insurance | Adamjee Insurance vs. JS Investments | Adamjee Insurance vs. Reliance Insurance Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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