Correlation Between IBL HealthCare and Habib Bank
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare 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 IBL HealthCare and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Habib Bank, you can compare the effects of market volatilities on IBL HealthCare 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 IBL HealthCare with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Habib Bank.
Diversification Opportunities for IBL HealthCare and Habib Bank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between IBL and Habib is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank 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 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 IBL HealthCare i.e., IBL HealthCare and Habib Bank go up and down completely randomly.
Pair Corralation between IBL HealthCare and Habib Bank
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 2.33 times less return on investment than Habib Bank. In addition to that, IBL HealthCare is 1.32 times more volatile than Habib Bank. It trades about 0.04 of its total potential returns per unit of risk. Habib Bank is currently generating about 0.13 per unit of volatility. If you would invest 6,401 in Habib Bank on August 29, 2024 and sell it today you would earn a total of 9,050 from holding Habib Bank or generate 141.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
IBL HealthCare vs. Habib Bank
Performance |
| Timeline |
| IBL HealthCare |
| Habib Bank |
IBL HealthCare and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Habib Bank
The main advantage of trading using opposite IBL HealthCare and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare 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.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
| Habib Bank vs. Amreli Steels | Habib Bank vs. Habib Insurance | Habib Bank vs. EFU General Insurance | Habib Bank vs. Crescent Steel Allied |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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