Correlation Between Gatron Industries and Habib Insurance

Can any of the company-specific risk be diversified away by investing in both Gatron Industries and Habib 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 Gatron Industries and Habib Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gatron Industries and Habib Insurance, you can compare the effects of market volatilities on Gatron Industries and Habib 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 Gatron Industries with a short position of Habib Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatron Industries and Habib Insurance.

Diversification Opportunities for Gatron Industries and Habib Insurance

-0.56

Correlation Coefficient

Gatron Industries  Habib Insurance

Excellent diversification

The 3 months correlation between Gatron and Habib is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Gatron Industries 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 Gatron Industries are associated (or correlated) with Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of Gatron Industries i.e., Gatron Industries and Habib Insurance go up and down completely randomly.

Pair Corralation between Gatron Industries and Habib Insurance

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Habib Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 2.54 times less risky than Habib Insurance. The stock trades about -0.2 of its potential returns per unit of risk. The Habib Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Habib Insurance on December 2, 2024 and sell it today you would earn a total of  209.00  from holding Habib Insurance or generate 29.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gatron Industries  vs.  Habib Insurance

Gatron Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gatron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Habib Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Habib Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Habib Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatron Industries and Habib Insurance

The main advantage of trading using opposite Gatron Industries and Habib Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatron Industries position performs unexpectedly, Habib 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 Habib Insurance will offset losses from the drop in Habib Insurance's long position.

The idea behind Gatron Industries and Habib Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.