Correlation Between Oil and Shaheen Insurance
Can any of the company-specific risk be diversified away by investing in both Oil 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 Oil and Shaheen Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil and Gas and Shaheen Insurance, you can compare the effects of market volatilities on Oil 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 Oil with a short position of Shaheen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil and Shaheen Insurance.
Diversification Opportunities for Oil and Shaheen Insurance
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Shaheen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Oil and Gas and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and Oil 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 Oil and Gas 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 Oil i.e., Oil and Shaheen Insurance go up and down completely randomly.
Pair Corralation between Oil and Shaheen Insurance
Assuming the 90 days trading horizon Oil is expected to generate 1.04 times less return on investment than Shaheen Insurance. But when comparing it to its historical volatility, Oil and Gas is 1.91 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 0.06 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Shaheen Insurance on August 26, 2024 and sell it today you would earn a total of 266.00 from holding Shaheen Insurance or generate 90.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.4% |
| Values | Daily Returns |
Oil and Gas vs. Shaheen Insurance
Performance |
| Timeline |
| Oil and Gas |
| Shaheen Insurance |
Oil and Shaheen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil and Shaheen Insurance
The main advantage of trading using opposite Oil and Shaheen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil 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.The idea behind Oil and Gas and Shaheen Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB Bank |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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