Correlation Between Nimir Industrial and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial 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 Nimir Industrial and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nimir Industrial Chemical and Habib Bank, you can compare the effects of market volatilities on Nimir Industrial 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 Nimir Industrial with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Habib Bank.
Diversification Opportunities for Nimir Industrial and Habib Bank
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nimir and Habib is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Nimir Industrial 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 Nimir Industrial Chemical 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 Nimir Industrial i.e., Nimir Industrial and Habib Bank go up and down completely randomly.
Pair Corralation between Nimir Industrial and Habib Bank
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 1.05 times less return on investment than Habib Bank. In addition to that, Nimir Industrial is 1.38 times more volatile than Habib Bank. It trades about 0.09 of its total potential returns per unit of risk. Habib Bank is currently generating about 0.13 per unit of volatility. If you would invest 6,401 in Habib Bank on August 29, 2024 and sell it today you would earn a total of 9,050 from holding Habib Bank or generate 141.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.64% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Habib Bank
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Habib Bank |
Nimir Industrial and Habib Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Habib Bank
The main advantage of trading using opposite Nimir Industrial and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial 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.| Nimir Industrial vs. Masood Textile Mills | Nimir Industrial vs. Fauji Foods | Nimir Industrial vs. KSB Pumps | Nimir Industrial vs. Mari Petroleum |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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