Correlation Between Unilever Pakistan and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both Unilever Pakistan and Premier Insurance 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 Unilever Pakistan and Premier Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Pakistan Foods and Premier Insurance, you can compare the effects of market volatilities on Unilever Pakistan and Premier Insurance 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 Unilever Pakistan with a short position of Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and Premier Insurance.
Diversification Opportunities for Unilever Pakistan and Premier Insurance
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Unilever and Premier is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and Unilever Pakistan 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 Unilever Pakistan Foods are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Unilever Pakistan i.e., Unilever Pakistan and Premier Insurance go up and down completely randomly.
Pair Corralation between Unilever Pakistan and Premier Insurance
Assuming the 90 days trading horizon Unilever Pakistan is expected to generate 1.18 times less return on investment than Premier Insurance. But when comparing it to its historical volatility, Unilever Pakistan Foods is 4.34 times less risky than Premier Insurance. It trades about 0.2 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 594.00 in Premier Insurance on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Premier Insurance or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. Premier Insurance
Performance |
| Timeline |
| Unilever Pakistan Foods |
| Premier Insurance |
Unilever Pakistan and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and Premier Insurance
The main advantage of trading using opposite Unilever Pakistan and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan position performs unexpectedly, Premier Insurance 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| Unilever Pakistan vs. Century Insurance | Unilever Pakistan vs. JS Global Banking | Unilever Pakistan vs. Reliance Insurance Co | Unilever Pakistan vs. Soneri Bank |
| Premier Insurance vs. Habib Bank | Premier Insurance vs. National Bank of | Premier Insurance vs. United Bank | Premier Insurance vs. MCB Bank |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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