Correlation Between Shaheen Insurance and Pakistan Services
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Pakistan Services 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 Services 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 Services Limited, you can compare the effects of market volatilities on Shaheen Insurance and Pakistan Services 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 Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Pakistan Services.
Diversification Opportunities for Shaheen Insurance and Pakistan Services
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shaheen and Pakistan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Pakistan Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Services 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 Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Services has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Pakistan Services go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Pakistan Services
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 1.2 times more return on investment than Pakistan Services. However, Shaheen Insurance is 1.2 times more volatile than Pakistan Services Limited. It trades about 0.06 of its potential returns per unit of risk. Pakistan Services Limited is currently generating about -0.03 per unit of risk. If you would invest 299.00 in Shaheen Insurance on September 14, 2024 and sell it today you would earn a total of 310.00 from holding Shaheen Insurance or generate 103.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.17% |
| Values | Daily Returns |
Shaheen Insurance vs. Pakistan Services Limited
Performance |
| Timeline |
| Shaheen Insurance |
| Pakistan Services |
Shaheen Insurance and Pakistan Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Pakistan Services
The main advantage of trading using opposite Shaheen Insurance and Pakistan Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Pakistan Services 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 Services will offset losses from the drop in Pakistan Services' long position.| Shaheen Insurance vs. Masood Textile Mills | Shaheen Insurance vs. Fauji Foods | Shaheen Insurance vs. KSB Pumps | Shaheen Insurance vs. Mari Petroleum |
| Pakistan Services vs. Shaheen Insurance | Pakistan Services vs. Askari Bank | Pakistan Services vs. Atlas Insurance | Pakistan Services vs. ITTEFAQ Iron Industries |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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