Correlation Between Habib Insurance and First Credit

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

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

Diversification Opportunities for Habib Insurance and First Credit

0.39

Correlation Coefficient

Habib Insurance  First Credit

Weak diversification

The 3 months correlation between Habib and First is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and First Credit And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Credit And and Habib 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 Habib Insurance are associated (or correlated) with First Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Credit And has no effect on the direction of Habib Insurance i.e., Habib Insurance and First Credit go up and down completely randomly.

Pair Corralation between Habib Insurance and First Credit

Assuming the 90 days trading horizon Habib Insurance is expected to generate 0.53 times more return on investment than First Credit. However, Habib Insurance is 1.9 times less risky than First Credit. It trades about 0.1 of its potential returns per unit of risk. First Credit And is currently generating about 0.01 per unit of risk. If you would invest  790.00  in Habib Insurance on December 23, 2024 and sell it today you would earn a total of  139.00  from holding Habib Insurance or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.19%
Values	Daily Returns

Habib Insurance  vs.  First Credit And

Habib Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Habib Insurance are ranked lower than 7 (%) 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.

First Credit And

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Credit And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, First Credit is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Habib Insurance and First Credit

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

The idea behind Habib Insurance and First Credit And 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.