Correlation Between Shaheen Insurance and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Pakistan State 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 State 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 State Oil, you can compare the effects of market volatilities on Shaheen Insurance and Pakistan State 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 State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Pakistan State.
Diversification Opportunities for Shaheen Insurance and Pakistan State
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shaheen and Pakistan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil 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 State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Pakistan State go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Pakistan State
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 1.32 times more return on investment than Pakistan State. However, Shaheen Insurance is 1.32 times more volatile than Pakistan State Oil. It trades about -0.07 of its potential returns per unit of risk. Pakistan State Oil is currently generating about -0.31 per unit of risk. If you would invest 670.00 in Shaheen Insurance on November 4, 2024 and sell it today you would lose (35.00) from holding Shaheen Insurance or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Shaheen Insurance vs. Pakistan State Oil
Performance |
| Timeline |
| Shaheen Insurance |
| Pakistan State Oil |
Shaheen Insurance and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Pakistan State
The main advantage of trading using opposite Shaheen Insurance and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Pakistan State 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 State will offset losses from the drop in Pakistan State's long position.| Shaheen Insurance vs. Masood Textile Mills | Shaheen Insurance vs. Fauji Foods | Shaheen Insurance vs. KSB Pumps | Shaheen Insurance vs. Mari Petroleum |
| Pakistan State vs. Adamjee Insurance | Pakistan State vs. Universal Insurance | Pakistan State vs. AKD Hospitality | Pakistan State vs. EFU General 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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