Correlation Between Premier Insurance and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Abbott Laboratories 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 Premier Insurance and Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Abbott Laboratories Pakistan, you can compare the effects of market volatilities on Premier Insurance and Abbott Laboratories 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 Premier Insurance with a short position of Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Abbott Laboratories.
Diversification Opportunities for Premier Insurance and Abbott Laboratories
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Premier and Abbott is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Abbott Laboratories Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and Premier Insurance 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 Premier Insurance are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of Premier Insurance i.e., Premier Insurance and Abbott Laboratories go up and down completely randomly.
Pair Corralation between Premier Insurance and Abbott Laboratories
Assuming the 90 days trading horizon Premier Insurance is expected to generate 2.98 times more return on investment than Abbott Laboratories. However, Premier Insurance is 2.98 times more volatile than Abbott Laboratories Pakistan. It trades about 0.03 of its potential returns per unit of risk. Abbott Laboratories Pakistan is currently generating about 0.08 per unit of risk. If you would invest 650.00 in Premier Insurance on September 2, 2024 and sell it today you would lose (39.00) from holding Premier Insurance or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 68.53% |
| Values | Daily Returns |
Premier Insurance vs. Abbott Laboratories Pakistan
Performance |
| Timeline |
| Premier Insurance |
| Abbott Laboratories |
Premier Insurance and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Abbott Laboratories
The main advantage of trading using opposite Premier Insurance and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| Premier Insurance vs. Habib Bank | Premier Insurance vs. National Bank of | Premier Insurance vs. United Bank | Premier Insurance vs. MCB Bank |
| Abbott Laboratories vs. Reliance Insurance Co | Abbott Laboratories vs. EFU General Insurance | Abbott Laboratories vs. Premier Insurance | Abbott Laboratories vs. Sitara Chemical Industries |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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