Correlation Between Shaheen Insurance and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Bank of Punjab 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 Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaheen Insurance and Bank of Punjab, you can compare the effects of market volatilities on Shaheen Insurance and Bank of Punjab 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 Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Bank of Punjab.
Diversification Opportunities for Shaheen Insurance and Bank of Punjab
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shaheen and Bank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab 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 Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Bank of Punjab go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Bank of Punjab
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 1.82 times more return on investment than Bank of Punjab. However, Shaheen Insurance is 1.82 times more volatile than Bank of Punjab. It trades about 0.06 of its potential returns per unit of risk. Bank of Punjab is currently generating about 0.05 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 | Significant |
| Accuracy | 78.4% |
| Values | Daily Returns |
Shaheen Insurance vs. Bank of Punjab
Performance |
| Timeline |
| Shaheen Insurance |
| Bank of Punjab |
Shaheen Insurance and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Bank of Punjab
The main advantage of trading using opposite Shaheen Insurance and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB Bank |
| Bank of Punjab vs. Habib Bank | Bank of Punjab vs. National Bank of | Bank of Punjab vs. Meezan Bank | Bank of Punjab 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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