Correlation Between KSB Pumps and Shaheen Insurance
Can any of the company-specific risk be diversified away by investing in both KSB Pumps and Shaheen 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 KSB Pumps and Shaheen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSB Pumps and Shaheen Insurance, you can compare the effects of market volatilities on KSB Pumps and Shaheen 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 KSB Pumps with a short position of Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSB Pumps and Shaheen Insurance.
Diversification Opportunities for KSB Pumps and Shaheen Insurance
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KSB and Shaheen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KSB Pumps and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and KSB Pumps 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 KSB Pumps are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of KSB Pumps i.e., KSB Pumps and Shaheen Insurance go up and down completely randomly.
Pair Corralation between KSB Pumps and Shaheen Insurance
Assuming the 90 days trading horizon KSB Pumps is expected to generate 1.48 times less return on investment than Shaheen Insurance. But when comparing it to its historical volatility, KSB Pumps is 1.35 times less risky than Shaheen Insurance. It trades about 0.11 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Shaheen Insurance on November 28, 2024 and sell it today you would earn a total of 45.00 from holding Shaheen Insurance or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KSB Pumps vs. Shaheen Insurance
Performance |
| Timeline |
| KSB Pumps |
| Shaheen Insurance |
KSB Pumps and Shaheen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KSB Pumps and Shaheen Insurance
The main advantage of trading using opposite KSB Pumps and Shaheen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSB Pumps position performs unexpectedly, Shaheen 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 Shaheen Insurance will offset losses from the drop in Shaheen Insurance's long position.| KSB Pumps vs. Soneri Bank | KSB Pumps vs. Pakistan Reinsurance | KSB Pumps vs. ORIX Leasing Pakistan | KSB Pumps vs. Sindh Modaraba Management |
| Shaheen Insurance vs. National Foods | Shaheen Insurance vs. Sitara Chemical Industries | Shaheen Insurance vs. Pak Datacom | Shaheen Insurance vs. Unity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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