Correlation Between Pakistan Hotel and Habib Metropolitan
Can any of the company-specific risk be diversified away by investing in both Pakistan Hotel and Habib Metropolitan 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 Pakistan Hotel and Habib Metropolitan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Hotel Developers and Habib Metropolitan Bank, you can compare the effects of market volatilities on Pakistan Hotel and Habib Metropolitan 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 Pakistan Hotel with a short position of Habib Metropolitan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Hotel and Habib Metropolitan.
Diversification Opportunities for Pakistan Hotel and Habib Metropolitan
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pakistan and Habib is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Hotel Developers and Habib Metropolitan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Metropolitan Bank and Pakistan Hotel 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 Pakistan Hotel Developers are associated (or correlated) with Habib Metropolitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Metropolitan Bank has no effect on the direction of Pakistan Hotel i.e., Pakistan Hotel and Habib Metropolitan go up and down completely randomly.
Pair Corralation between Pakistan Hotel and Habib Metropolitan
Assuming the 90 days trading horizon Pakistan Hotel Developers is expected to generate 1.5 times more return on investment than Habib Metropolitan. However, Pakistan Hotel is 1.5 times more volatile than Habib Metropolitan Bank. It trades about 0.56 of its potential returns per unit of risk. Habib Metropolitan Bank is currently generating about 0.31 per unit of risk. If you would invest 3,502 in Pakistan Hotel Developers on September 14, 2024 and sell it today you would earn a total of 2,527 from holding Pakistan Hotel Developers or generate 72.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Hotel Developers vs. Habib Metropolitan Bank
Performance |
| Timeline |
| Pakistan Hotel Developers |
| Habib Metropolitan Bank |
Pakistan Hotel and Habib Metropolitan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Hotel and Habib Metropolitan
The main advantage of trading using opposite Pakistan Hotel and Habib Metropolitan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Hotel position performs unexpectedly, Habib Metropolitan 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 Metropolitan will offset losses from the drop in Habib Metropolitan's long position.| Pakistan Hotel vs. Habib Insurance | Pakistan Hotel vs. Ghandhara Automobile | Pakistan Hotel vs. Century Insurance | Pakistan Hotel vs. Reliance Weaving Mills |
| Habib Metropolitan vs. Pakistan Hotel Developers | Habib Metropolitan vs. Beco Steel | Habib Metropolitan vs. Oil and Gas | Habib Metropolitan vs. International Steels |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |