Correlation Between Honda Atlas and Habib Bank

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Can any of the company-specific risk be diversified away by investing in both Honda Atlas 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 Honda Atlas and Habib Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Atlas Cars and Habib Bank, you can compare the effects of market volatilities on Honda Atlas 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 Honda Atlas with a short position of Habib Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda Atlas and Habib Bank.

Diversification Opportunities for Honda Atlas and Habib Bank

HondaHabibDiversified AwayHondaHabibDiversified Away100%
0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Honda and Habib is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Honda Atlas Cars and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Honda Atlas 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 Honda Atlas Cars 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 Honda Atlas i.e., Honda Atlas and Habib Bank go up and down completely randomly.

Pair Corralation between Honda Atlas and Habib Bank

Assuming the 90 days trading horizon Honda Atlas is expected to generate 1.04 times less return on investment than Habib Bank. In addition to that, Honda Atlas is 1.16 times more volatile than Habib Bank. It trades about 0.11 of its total potential returns per unit of risk. Habib Bank is currently generating about 0.14 per unit of volatility. If you would invest  13,986  in Habib Bank on October 26, 2024 and sell it today you would earn a total of  3,465  from holding Habib Bank or generate 24.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

Honda Atlas Cars  vs.  Habib Bank

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15HCAR HBL
       Timeline  
Honda Atlas Cars 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Honda Atlas Cars are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Honda Atlas sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan240260280300320340360
Habib Bank 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Habib Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Habib Bank reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130140150160170180

Honda Atlas and Habib Bank Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.2-7.64-5.08-2.520.04272.625.297.9510.62 0.020.030.040.05
JavaScript chart by amCharts 3.21.15HCAR HBL
       Returns  

Pair Trading with Honda Atlas and Habib Bank

The main advantage of trading using opposite Honda Atlas and Habib Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda Atlas 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.
The idea behind Honda Atlas Cars and Habib Bank 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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