Correlation Between Lucky Cement and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Lucky Cement 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 Lucky Cement and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucky Cement and Habib Bank, you can compare the effects of market volatilities on Lucky Cement 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 Lucky Cement with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Habib Bank.
Diversification Opportunities for Lucky Cement and Habib Bank
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lucky and Habib is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Lucky Cement 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 Lucky Cement 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 Lucky Cement i.e., Lucky Cement and Habib Bank go up and down completely randomly.
Pair Corralation between Lucky Cement and Habib Bank
Assuming the 90 days trading horizon Lucky Cement is expected to generate 2.51 times less return on investment than Habib Bank. But when comparing it to its historical volatility, Lucky Cement is 1.37 times less risky than Habib Bank. It trades about 0.07 of its potential returns per unit of risk. Habib Bank is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,687 in Habib Bank on August 28, 2024 and sell it today you would earn a total of 4,031 from holding Habib Bank or generate 37.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucky Cement vs. Habib Bank
Performance |
| Timeline |
| Lucky Cement |
| Habib Bank |
Lucky Cement and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Habib Bank
The main advantage of trading using opposite Lucky Cement and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement 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.| Lucky Cement vs. Ghandhara Automobile | Lucky Cement vs. MCB Investment Manag | Lucky Cement vs. Escorts Investment Bank | Lucky Cement vs. Habib Insurance |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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