Correlation Between Bank Alfalah and Habib Bank
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah and Habib 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 Bank Alfalah and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and Habib Bank, you can compare the effects of market volatilities on Bank Alfalah and Habib 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 Bank Alfalah with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and Habib Bank.
Diversification Opportunities for Bank Alfalah and Habib Bank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Habib is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Bank Alfalah 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 Bank Alfalah are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Bank Alfalah i.e., Bank Alfalah and Habib Bank go up and down completely randomly.
Pair Corralation between Bank Alfalah and Habib Bank
Assuming the 90 days trading horizon Bank Alfalah is expected to under-perform the Habib Bank. In addition to that, Bank Alfalah is 1.08 times more volatile than Habib Bank. It trades about -0.16 of its total potential returns per unit of risk. Habib Bank is currently generating about -0.12 per unit of volatility. If you would invest 16,687 in Habib Bank on December 29, 2024 and sell it today you would lose (1,408) from holding Habib Bank or give up 8.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Alfalah vs. Habib Bank
Performance |
Timeline |
Bank Alfalah |
Habib Bank |
Bank Alfalah and Habib Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Alfalah and Habib Bank
The main advantage of trading using opposite Bank Alfalah and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah position performs unexpectedly, Habib 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 Habib Bank will offset losses from the drop in Habib Bank's long position.Bank Alfalah vs. Hi Tech Lubricants | Bank Alfalah vs. Synthetic Products Enterprises | Bank Alfalah vs. Engro Polymer Chemicals | Bank Alfalah vs. Packages |
Habib Bank vs. United Insurance | Habib Bank vs. IGI Life Insurance | Habib Bank vs. Air Link Communication | Habib Bank vs. Supernet Technologie |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Commodity Directory Find actively traded commodities issued by global exchanges |