Correlation Between Orient Rental and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Orient Rental and Universal 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 Universal 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 Universal Insurance, you can compare the effects of market volatilities on Orient Rental and Universal 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and Universal Insurance.
Diversification Opportunities for Orient Rental and Universal Insurance
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orient and Universal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba and Universal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Orient Rental i.e., Orient Rental and Universal Insurance go up and down completely randomly.
Pair Corralation between Orient Rental and Universal Insurance
Assuming the 90 days trading horizon Orient Rental is expected to generate 2.71 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, Orient Rental Modaraba is 2.0 times less risky than Universal Insurance. It trades about 0.02 of its potential returns per unit of risk. Universal Insurance is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Universal Insurance on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Universal Insurance or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Orient Rental Modaraba vs. Universal Insurance
Performance |
| Timeline |
| Orient Rental Modaraba |
| Universal Insurance |
Orient Rental and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and Universal Insurance
The main advantage of trading using opposite Orient Rental and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental position performs unexpectedly, Universal 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Orient Rental vs. Unity Foods | Orient Rental vs. Oil and Gas | Orient Rental vs. Data Agro | Orient Rental vs. Nimir Industrial Chemical |
| Universal Insurance vs. Wah Nobel Chemicals | Universal Insurance vs. Hi Tech Lubricants | Universal Insurance vs. IBL HealthCare | Universal Insurance vs. ORIX Leasing Pakistan |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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