Correlation Between Orient Rental and United Insurance
Can any of the company-specific risk be diversified away by investing in both Orient Rental and United 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 Orient Rental and United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Rental Modaraba and United Insurance, you can compare the effects of market volatilities on Orient Rental and United 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 Orient Rental with a short position of United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and United Insurance.
Diversification Opportunities for Orient Rental and United Insurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orient and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance and Orient Rental 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 Orient Rental Modaraba are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of Orient Rental i.e., Orient Rental and United Insurance go up and down completely randomly.
Pair Corralation between Orient Rental and United Insurance
Assuming the 90 days trading horizon Orient Rental Modaraba is expected to generate 2.27 times more return on investment than United Insurance. However, Orient Rental is 2.27 times more volatile than United Insurance. It trades about 0.07 of its potential returns per unit of risk. United Insurance is currently generating about 0.1 per unit of risk. If you would invest 429.00 in Orient Rental Modaraba on August 31, 2024 and sell it today you would earn a total of 359.00 from holding Orient Rental Modaraba or generate 83.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.93% |
| Values | Daily Returns |
Orient Rental Modaraba vs. United Insurance
Performance |
| Timeline |
| Orient Rental Modaraba |
| United Insurance |
Orient Rental and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and United Insurance
The main advantage of trading using opposite Orient Rental and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental position performs unexpectedly, United 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 United Insurance will offset losses from the drop in United Insurance's long position.| Orient Rental vs. Masood Textile Mills | Orient Rental vs. Fauji Foods | Orient Rental vs. KSB Pumps | Orient Rental vs. Mari Petroleum |
| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |