Correlation Between Shaheen Insurance and Pakistan Tobacco
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Pakistan Tobacco 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 Pakistan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaheen Insurance and Pakistan Tobacco, you can compare the effects of market volatilities on Shaheen Insurance and Pakistan Tobacco 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 Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Pakistan Tobacco.
Diversification Opportunities for Shaheen Insurance and Pakistan Tobacco
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shaheen and Pakistan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco 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 Pakistan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Tobacco has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Pakistan Tobacco
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 2.07 times more return on investment than Pakistan Tobacco. However, Shaheen Insurance is 2.07 times more volatile than Pakistan Tobacco. It trades about 0.33 of its potential returns per unit of risk. Pakistan Tobacco is currently generating about -0.02 per unit of risk. If you would invest 475.00 in Shaheen Insurance on August 27, 2024 and sell it today you would earn a total of 85.00 from holding Shaheen Insurance or generate 17.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaheen Insurance vs. Pakistan Tobacco
Performance |
| Timeline |
| Shaheen Insurance |
| Pakistan Tobacco |
Shaheen Insurance and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Pakistan Tobacco
The main advantage of trading using opposite Shaheen Insurance and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Pakistan Tobacco 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 Pakistan Tobacco will offset losses from the drop in Pakistan Tobacco's long position.| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB Bank |
| Pakistan Tobacco vs. EFU General Insurance | Pakistan Tobacco vs. Shaheen Insurance | Pakistan Tobacco vs. Faysal Bank | Pakistan Tobacco vs. Bank of Punjab |
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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