Correlation Between Shaheen Insurance and Silkbank
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Silkbank 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 Silkbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaheen Insurance and Silkbank, you can compare the effects of market volatilities on Shaheen Insurance and Silkbank 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 Silkbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Silkbank.
Diversification Opportunities for Shaheen Insurance and Silkbank
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shaheen and Silkbank is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Silkbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkbank 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 Silkbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkbank has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Silkbank go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Silkbank
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 2.52 times more return on investment than Silkbank. However, Shaheen Insurance is 2.52 times more volatile than Silkbank. It trades about 0.29 of its potential returns per unit of risk. Silkbank is currently generating about -0.08 per unit of risk. If you would invest 500.00 in Shaheen Insurance on September 2, 2024 and sell it today you would earn a total of 99.00 from holding Shaheen Insurance or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaheen Insurance vs. Silkbank
Performance |
| Timeline |
| Shaheen Insurance |
| Silkbank |
Shaheen Insurance and Silkbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Silkbank
The main advantage of trading using opposite Shaheen Insurance and Silkbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Silkbank 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 Silkbank will offset losses from the drop in Silkbank's long position.| Shaheen Insurance vs. Habib Bank | Shaheen Insurance vs. National Bank of | Shaheen Insurance vs. United Bank | Shaheen Insurance vs. MCB Bank |
| Silkbank vs. Masood Textile Mills | Silkbank vs. Fauji Foods | Silkbank vs. KSB Pumps | Silkbank vs. Mari Petroleum |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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