Correlation Between Reliance Insurance and Askari Bank
Can any of the company-specific risk be diversified away by investing in both Reliance Insurance and Askari Bank 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 Reliance Insurance and Askari Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Insurance Co and Askari Bank, you can compare the effects of market volatilities on Reliance Insurance and Askari Bank 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 Reliance Insurance with a short position of Askari Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Insurance and Askari Bank.
Diversification Opportunities for Reliance Insurance and Askari Bank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reliance and Askari is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Insurance Co and Askari Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Bank and Reliance 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 Reliance Insurance Co are associated (or correlated) with Askari Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Bank has no effect on the direction of Reliance Insurance i.e., Reliance Insurance and Askari Bank go up and down completely randomly.
Pair Corralation between Reliance Insurance and Askari Bank
Assuming the 90 days trading horizon Reliance Insurance Co is expected to generate 1.87 times more return on investment than Askari Bank. However, Reliance Insurance is 1.87 times more volatile than Askari Bank. It trades about 0.1 of its potential returns per unit of risk. Askari Bank is currently generating about 0.11 per unit of risk. If you would invest 588.00 in Reliance Insurance Co on August 27, 2024 and sell it today you would earn a total of 612.00 from holding Reliance Insurance Co or generate 104.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.63% |
| Values | Daily Returns |
Reliance Insurance Co vs. Askari Bank
Performance |
| Timeline |
| Reliance Insurance |
| Askari Bank |
Reliance Insurance and Askari Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Insurance and Askari Bank
The main advantage of trading using opposite Reliance Insurance and Askari Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Insurance position performs unexpectedly, Askari Bank 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 Askari Bank will offset losses from the drop in Askari Bank's long position.| Reliance Insurance vs. Habib Bank | Reliance Insurance vs. National Bank of | Reliance Insurance vs. United Bank | Reliance Insurance vs. MCB Bank |
| Askari Bank vs. National Bank of | Askari Bank vs. Meezan Bank | Askari Bank vs. Bank Al Habib | Askari Bank vs. Habib Metropolitan Bank |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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