Correlation Between United Insurance and Bilal Fibres
Can any of the company-specific risk be diversified away by investing in both United Insurance and Bilal Fibres 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 Insurance and Bilal Fibres into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and Bilal Fibres, you can compare the effects of market volatilities on United Insurance and Bilal Fibres 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 Insurance with a short position of Bilal Fibres. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Bilal Fibres.
Diversification Opportunities for United Insurance and Bilal Fibres
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Bilal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and Bilal Fibres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilal Fibres and United 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 United Insurance are associated (or correlated) with Bilal Fibres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilal Fibres has no effect on the direction of United Insurance i.e., United Insurance and Bilal Fibres go up and down completely randomly.
Pair Corralation between United Insurance and Bilal Fibres
Assuming the 90 days trading horizon United Insurance is expected to under-perform the Bilal Fibres. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance is 6.63 times less risky than Bilal Fibres. The stock trades about -0.21 of its potential returns per unit of risk. The Bilal Fibres is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,700 in Bilal Fibres on August 30, 2024 and sell it today you would lose (80.00) from holding Bilal Fibres or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance vs. Bilal Fibres
Performance |
| Timeline |
| United Insurance |
| Bilal Fibres |
United Insurance and Bilal Fibres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Bilal Fibres
The main advantage of trading using opposite United Insurance and Bilal Fibres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Bilal Fibres 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 Bilal Fibres will offset losses from the drop in Bilal Fibres' long position.| United Insurance vs. Masood Textile Mills | United Insurance vs. Fauji Foods | United Insurance vs. KSB Pumps | United Insurance vs. Mari Petroleum |
| Bilal Fibres vs. Big Bird Foods | Bilal Fibres vs. Matco Foods | Bilal Fibres vs. Adamjee Insurance | Bilal Fibres vs. AKD Hospitality |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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