Correlation Between National Bank and Arif Habib
Can any of the company-specific risk be diversified away by investing in both National Bank and Arif Habib 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 National Bank and Arif Habib into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Arif Habib, you can compare the effects of market volatilities on National Bank and Arif Habib 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 National Bank with a short position of Arif Habib. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Arif Habib.
Diversification Opportunities for National Bank and Arif Habib
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Arif is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Arif Habib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arif Habib and National Bank 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 National Bank of are associated (or correlated) with Arif Habib. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arif Habib has no effect on the direction of National Bank i.e., National Bank and Arif Habib go up and down completely randomly.
Pair Corralation between National Bank and Arif Habib
Assuming the 90 days trading horizon National Bank of is expected to generate 0.64 times more return on investment than Arif Habib. However, National Bank of is 1.57 times less risky than Arif Habib. It trades about 0.12 of its potential returns per unit of risk. Arif Habib is currently generating about 0.04 per unit of risk. If you would invest 3,108 in National Bank of on August 26, 2024 and sell it today you would earn a total of 3,243 from holding National Bank of or generate 104.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
National Bank of vs. Arif Habib
Performance |
| Timeline |
| National Bank |
| Arif Habib |
National Bank and Arif Habib Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Arif Habib
The main advantage of trading using opposite National Bank and Arif Habib positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Arif Habib 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 Arif Habib will offset losses from the drop in Arif Habib's long position.| National Bank vs. Big Bird Foods | National Bank vs. Amreli Steels | National Bank vs. Crescent Steel Allied | National Bank vs. Ghandhara Automobile |
| Arif Habib vs. Wah Nobel Chemicals | Arif Habib vs. National Bank of | Arif Habib vs. Sardar Chemical Industries | Arif Habib vs. Nimir Industrial Chemical |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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