Correlation Between Pakistan National and Habib Insurance
Can any of the company-specific risk be diversified away by investing in both Pakistan National 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 Pakistan National and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan National Shipping and Habib Insurance, you can compare the effects of market volatilities on Pakistan National 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 Pakistan National with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan National and Habib Insurance.
Diversification Opportunities for Pakistan National and Habib Insurance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Habib is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan National Shipping and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Pakistan National 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 National Shipping 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 Pakistan National i.e., Pakistan National and Habib Insurance go up and down completely randomly.
Pair Corralation between Pakistan National and Habib Insurance
Assuming the 90 days trading horizon Pakistan National Shipping is expected to under-perform the Habib Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan National Shipping is 1.26 times less risky than Habib Insurance. The stock trades about -0.2 of its potential returns per unit of risk. The Habib Insurance is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Habib Insurance on November 6, 2024 and sell it today you would lose (20.00) from holding Habib Insurance or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Pakistan National Shipping vs. Habib Insurance
Performance |
| Timeline |
| Pakistan National |
| Habib Insurance |
Pakistan National and Habib Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan National and Habib Insurance
The main advantage of trading using opposite Pakistan National and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan National 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.| Pakistan National vs. The Organic Meat | Pakistan National vs. Matco Foods | Pakistan National vs. Pakistan Aluminium Beverage | Pakistan National vs. Allied Bank |
| Habib Insurance vs. TPL Insurance | Habib Insurance vs. United Insurance | Habib Insurance vs. Air Link Communication | Habib Insurance vs. Bawany Air Products |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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