Correlation Between United Bank and Shifa International
Can any of the company-specific risk be diversified away by investing in both United Bank and Shifa International 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 United Bank and Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bank and Shifa International Hospitals, you can compare the effects of market volatilities on United Bank and Shifa International 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 United Bank with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Shifa International.
Diversification Opportunities for United Bank and Shifa International
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Shifa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Bank and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International and United Bank 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 United Bank are associated (or correlated) with Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of United Bank i.e., United Bank and Shifa International go up and down completely randomly.
Pair Corralation between United Bank and Shifa International
Assuming the 90 days trading horizon United Bank is expected to generate 0.67 times more return on investment than Shifa International. However, United Bank is 1.49 times less risky than Shifa International. It trades about 0.22 of its potential returns per unit of risk. Shifa International Hospitals is currently generating about 0.12 per unit of risk. If you would invest 6,244 in United Bank on November 2, 2024 and sell it today you would earn a total of 32,922 from holding United Bank or generate 527.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.27% |
| Values | Daily Returns |
United Bank vs. Shifa International Hospitals
Performance |
| Timeline |
| United Bank |
| Shifa International |
United Bank and Shifa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bank and Shifa International
The main advantage of trading using opposite United Bank and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.| United Bank vs. Fauji Foods | United Bank vs. Mughal Iron Steel | United Bank vs. Synthetic Products Enterprises | United Bank vs. ITTEFAQ Iron Industries |
| Shifa International vs. Engro Polymer Chemicals | Shifa International vs. Nimir Industrial Chemical | Shifa International vs. Wah Nobel Chemicals | Shifa International vs. Air Link Communication |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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