Correlation Between Premier Insurance and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Habib 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 Premier Insurance and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Habib Insurance, you can compare the effects of market volatilities on Premier Insurance and Habib 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 Premier Insurance with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Habib Insurance.
Diversification Opportunities for Premier Insurance and Habib Insurance
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Premier and Habib is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance 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 Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of Premier Insurance i.e., Premier Insurance and Habib Insurance go up and down completely randomly.
Pair Corralation between Premier Insurance and Habib Insurance
Assuming the 90 days trading horizon Premier Insurance is expected to generate 1.68 times more return on investment than Habib Insurance. However, Premier Insurance is 1.68 times more volatile than Habib Insurance. It trades about 0.03 of its potential returns per unit of risk. Habib Insurance is currently generating about 0.04 per unit of risk. If you would invest 650.00 in Premier Insurance on August 30, 2024 and sell it today you would lose (90.00) from holding Premier Insurance or give up 13.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.01% |
| Values | Daily Returns |
Premier Insurance vs. Habib Insurance
Performance |
| Timeline |
| Premier Insurance |
| Habib Insurance |
Premier Insurance and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Habib Insurance
The main advantage of trading using opposite Premier Insurance and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Habib 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 Habib Insurance will offset losses from the drop in Habib Insurance's long position.| Premier Insurance vs. Masood Textile Mills | Premier Insurance vs. Fauji Foods | Premier Insurance vs. KSB Pumps | Premier Insurance vs. Mari Petroleum |
| Habib Insurance vs. Masood Textile Mills | Habib Insurance vs. Fauji Foods | Habib Insurance vs. KSB Pumps | Habib Insurance vs. Mari Petroleum |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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