Correlation Between Habib Bank and Unity Foods

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

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

Diversification Opportunities for Habib Bank and Unity Foods

0.72

Correlation Coefficient

Habib Bank  Unity Foods

Poor diversification

The 3 months correlation between Habib and Unity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Habib Bank and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods and Habib Bank 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 Habib Bank are associated (or correlated) with Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of Habib Bank i.e., Habib Bank and Unity Foods go up and down completely randomly.

Pair Corralation between Habib Bank and Unity Foods

Assuming the 90 days trading horizon Habib Bank is expected to generate 0.75 times more return on investment than Unity Foods. However, Habib Bank is 1.34 times less risky than Unity Foods. It trades about -0.12 of its potential returns per unit of risk. Unity Foods is currently generating about -0.17 per unit of risk. If you would invest  16,687  in Habib Bank on December 30, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Habib Bank  vs.  Unity Foods

Habib Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Habib Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Unity Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unity Foods 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 forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Habib Bank and Unity Foods

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

The idea behind Habib Bank and Unity Foods 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.