Correlation Between TPL Insurance and Shell Pakistan
Can any of the company-specific risk be diversified away by investing in both TPL Insurance and Shell Pakistan 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 TPL Insurance and Shell Pakistan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and Shell Pakistan, you can compare the effects of market volatilities on TPL Insurance and Shell Pakistan 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 TPL Insurance with a short position of Shell Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Shell Pakistan.
Diversification Opportunities for TPL Insurance and Shell Pakistan
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TPL and Shell is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Shell Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell Pakistan and TPL 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 TPL Insurance are associated (or correlated) with Shell Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell Pakistan has no effect on the direction of TPL Insurance i.e., TPL Insurance and Shell Pakistan go up and down completely randomly.
Pair Corralation between TPL Insurance and Shell Pakistan
Assuming the 90 days trading horizon TPL Insurance is expected to under-perform the Shell Pakistan. In addition to that, TPL Insurance is 1.34 times more volatile than Shell Pakistan. It trades about -0.03 of its total potential returns per unit of risk. Shell Pakistan is currently generating about 0.08 per unit of volatility. If you would invest 12,978 in Shell Pakistan on September 12, 2024 and sell it today you would earn a total of 8,035 from holding Shell Pakistan or generate 61.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.67% |
| Values | Daily Returns |
TPL Insurance vs. Shell Pakistan
Performance |
| Timeline |
| TPL Insurance |
| Shell Pakistan |
TPL Insurance and Shell Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPL Insurance and Shell Pakistan
The main advantage of trading using opposite TPL Insurance and Shell Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, Shell Pakistan 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 Shell Pakistan will offset losses from the drop in Shell Pakistan's long position.| TPL Insurance vs. Masood Textile Mills | TPL Insurance vs. Fauji Foods | TPL Insurance vs. KSB Pumps | TPL Insurance vs. Mari Petroleum |
| Shell Pakistan vs. Habib Insurance | Shell Pakistan vs. Security Investment Bank | Shell Pakistan vs. Pakistan Telecommunication | Shell Pakistan vs. TPL 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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