Correlation Between International Steels and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both International Steels and Habib 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 International Steels and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and Habib Insurance, you can compare the effects of market volatilities on International Steels and Habib 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 International Steels with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and Habib Insurance.
Diversification Opportunities for International Steels and Habib Insurance
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Habib is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and International Steels 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 International Steels are associated (or correlated) with Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of International Steels i.e., International Steels and Habib Insurance go up and down completely randomly.
Pair Corralation between International Steels and Habib Insurance
Assuming the 90 days trading horizon International Steels is expected to generate 2.17 times less return on investment than Habib Insurance. But when comparing it to its historical volatility, International Steels is 1.51 times less risky than Habib Insurance. It trades about 0.05 of its potential returns per unit of risk. Habib Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 628.00 in Habib Insurance on August 30, 2024 and sell it today you would earn a total of 24.00 from holding Habib Insurance or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
International Steels vs. Habib Insurance
Performance |
| Timeline |
| International Steels |
| Habib Insurance |
International Steels and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and Habib Insurance
The main advantage of trading using opposite International Steels and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels position performs unexpectedly, Habib 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 Habib Insurance will offset losses from the drop in Habib Insurance's long position.| International Steels vs. Oil and Gas | International Steels vs. Roshan Packages | International Steels vs. WorldCall Telecom | International Steels vs. Air Link Communication |
| Habib Insurance vs. Masood Textile Mills | Habib Insurance vs. Fauji Foods | Habib Insurance vs. KSB Pumps | Habib Insurance vs. Mari Petroleum |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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