Correlation Between United Insurance and Pakistan International
Can any of the company-specific risk be diversified away by investing in both United Insurance and Pakistan 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 Insurance and Pakistan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and Pakistan International Bulk, you can compare the effects of market volatilities on United Insurance and Pakistan 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 Insurance with a short position of Pakistan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Pakistan International.
Diversification Opportunities for United Insurance and Pakistan International
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Pakistan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and Pakistan International Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan International 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 Pakistan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan International has no effect on the direction of United Insurance i.e., United Insurance and Pakistan International go up and down completely randomly.
Pair Corralation between United Insurance and Pakistan International
Assuming the 90 days trading horizon United Insurance is expected to generate 0.92 times more return on investment than Pakistan International. However, United Insurance is 1.09 times less risky than Pakistan International. It trades about 0.14 of its potential returns per unit of risk. Pakistan International Bulk is currently generating about -0.23 per unit of risk. If you would invest 1,644 in United Insurance on November 4, 2024 and sell it today you would earn a total of 96.00 from holding United Insurance or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance vs. Pakistan International Bulk
Performance |
| Timeline |
| United Insurance |
| Pakistan International |
United Insurance and Pakistan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Pakistan International
The main advantage of trading using opposite United Insurance and Pakistan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Pakistan 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 Pakistan International will offset losses from the drop in Pakistan International's long position.| United Insurance vs. Avanceon | United Insurance vs. Ittehad Chemicals | United Insurance vs. Hi Tech Lubricants | United Insurance vs. Metropolitan Steel Corp |
| Pakistan International vs. Air Link Communication | Pakistan International vs. Pakistan Reinsurance | Pakistan International vs. Pakistan Telecommunication | Pakistan International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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