Correlation Between Shaheen Insurance and Allied Bank
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Allied 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 Shaheen Insurance and Allied Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaheen Insurance and Allied Bank, you can compare the effects of market volatilities on Shaheen Insurance and Allied 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 Shaheen Insurance with a short position of Allied Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Allied Bank.
Diversification Opportunities for Shaheen Insurance and Allied Bank
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shaheen and Allied is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Allied Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Bank and Shaheen 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 Shaheen Insurance are associated (or correlated) with Allied Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Bank has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Allied Bank go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Allied Bank
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 3.09 times more return on investment than Allied Bank. However, Shaheen Insurance is 3.09 times more volatile than Allied Bank. It trades about 0.06 of its potential returns per unit of risk. Allied Bank is currently generating about 0.14 per unit of risk. If you would invest 294.00 in Shaheen Insurance on August 26, 2024 and sell it today you would earn a total of 266.00 from holding Shaheen Insurance or generate 90.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.47% |
| Values | Daily Returns |
Shaheen Insurance vs. Allied Bank
Performance |
| Timeline |
| Shaheen Insurance |
| Allied Bank |
Shaheen Insurance and Allied Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Allied Bank
The main advantage of trading using opposite Shaheen Insurance and Allied Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Allied 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 Allied Bank will offset losses from the drop in Allied Bank's long position.| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB Bank |
| Allied Bank vs. Habib Bank | Allied Bank vs. National Bank of | Allied Bank vs. Meezan Bank | Allied Bank vs. Bank Al Habib |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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