Correlation Between Matco Foods and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Matco Foods 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 Matco Foods and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Habib Insurance, you can compare the effects of market volatilities on Matco Foods 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 Matco Foods with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Habib Insurance.
Diversification Opportunities for Matco Foods and Habib Insurance
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matco and Habib is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Matco Foods 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 Matco Foods 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 Matco Foods i.e., Matco Foods and Habib Insurance go up and down completely randomly.
Pair Corralation between Matco Foods and Habib Insurance
Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Habib Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Matco Foods is 1.56 times less risky than Habib Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The Habib Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 545.00 in Habib Insurance on September 2, 2024 and sell it today you would earn a total of 152.00 from holding Habib Insurance or generate 27.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.18% |
| Values | Daily Returns |
Matco Foods vs. Habib Insurance
Performance |
| Timeline |
| Matco Foods |
| Habib Insurance |
Matco Foods and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Habib Insurance
The main advantage of trading using opposite Matco Foods and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods 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.| Matco Foods vs. Hi Tech Lubricants | Matco Foods vs. The Organic Meat | Matco Foods vs. Shifa International Hospitals | Matco Foods vs. Unity Foods |
| Habib Insurance vs. Security Investment Bank | Habib Insurance vs. Air Link Communication | Habib Insurance vs. Amreli Steels | Habib Insurance vs. Engro Polymer Chemicals |
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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