Correlation Between Shaheen Insurance and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Faysal 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 Faysal 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 Faysal Bank, you can compare the effects of market volatilities on Shaheen Insurance and Faysal 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 Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Faysal Bank.
Diversification Opportunities for Shaheen Insurance and Faysal Bank
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shaheen and Faysal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal 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 Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Faysal Bank go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Faysal Bank
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 1.15 times more return on investment than Faysal Bank. However, Shaheen Insurance is 1.15 times more volatile than Faysal Bank. It trades about 0.09 of its potential returns per unit of risk. Faysal Bank is currently generating about 0.1 per unit of risk. If you would invest 445.00 in Shaheen Insurance on September 3, 2024 and sell it today you would earn a total of 154.00 from holding Shaheen Insurance or generate 34.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.41% |
| Values | Daily Returns |
Shaheen Insurance vs. Faysal Bank
Performance |
| Timeline |
| Shaheen Insurance |
| Faysal Bank |
Shaheen Insurance and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Faysal Bank
The main advantage of trading using opposite Shaheen Insurance and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Faysal 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Shaheen Insurance vs. Faysal Bank | Shaheen Insurance vs. Ghani Chemical Industries | Shaheen Insurance vs. Meezan Bank | Shaheen Insurance vs. EFU General Insurance |
| Faysal Bank vs. EFU General Insurance | Faysal Bank vs. Adamjee Insurance | Faysal Bank vs. Murree Brewery | Faysal Bank vs. Century Insurance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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