Correlation Between Universal Insurance and Askari Bank
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Askari Bank 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 Universal Insurance and Askari Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance and Askari Bank, you can compare the effects of market volatilities on Universal Insurance and Askari Bank 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 Universal Insurance with a short position of Askari Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Askari Bank.
Diversification Opportunities for Universal Insurance and Askari Bank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Askari is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and Askari Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Bank and Universal 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 Universal Insurance are associated (or correlated) with Askari Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Bank has no effect on the direction of Universal Insurance i.e., Universal Insurance and Askari Bank go up and down completely randomly.
Pair Corralation between Universal Insurance and Askari Bank
Assuming the 90 days trading horizon Universal Insurance is expected to generate 1.39 times more return on investment than Askari Bank. However, Universal Insurance is 1.39 times more volatile than Askari Bank. It trades about 0.17 of its potential returns per unit of risk. Askari Bank is currently generating about 0.18 per unit of risk. If you would invest 651.00 in Universal Insurance on October 12, 2024 and sell it today you would earn a total of 361.00 from holding Universal Insurance or generate 55.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.83% |
| Values | Daily Returns |
Universal Insurance vs. Askari Bank
Performance |
| Timeline |
| Universal Insurance |
| Askari Bank |
Universal Insurance and Askari Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Askari Bank
The main advantage of trading using opposite Universal Insurance and Askari Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Askari Bank 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 Askari Bank will offset losses from the drop in Askari Bank's long position.| Universal Insurance vs. Masood Textile Mills | Universal Insurance vs. Fauji Foods | Universal Insurance vs. KSB Pumps | Universal Insurance vs. Mari Petroleum |
| Askari Bank vs. Pakistan Telecommunication | Askari Bank vs. Askari General Insurance | Askari Bank vs. Shaheen Insurance | Askari Bank vs. Universal 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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