Correlation Between Habib Insurance and Pak Gulf

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

By analyzing existing cross correlation between Habib Insurance and Pak Gulf Leasing, you can compare the effects of market volatilities on Habib Insurance and Pak Gulf 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 Pak Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habib Insurance and Pak Gulf.

Diversification Opportunities for Habib Insurance and Pak Gulf

0.2

Correlation Coefficient

Habib Insurance  Pak Gulf

Modest diversification

The 3 months correlation between Habib and Pak is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Habib Insurance and Pak Gulf Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Gulf Leasing 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 Pak Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Gulf Leasing has no effect on the direction of Habib Insurance i.e., Habib Insurance and Pak Gulf go up and down completely randomly.

Pair Corralation between Habib Insurance and Pak Gulf

Assuming the 90 days trading horizon Habib Insurance is expected to generate 0.5 times more return on investment than Pak Gulf. However, Habib Insurance is 2.0 times less risky than Pak Gulf. It trades about 0.07 of its potential returns per unit of risk. Pak Gulf Leasing is currently generating about -0.03 per unit of risk. If you would invest  841.00  in Habib Insurance on December 29, 2024 and sell it today you would earn a total of  86.00  from holding Habib Insurance or generate 10.23% return on investment over 90 days.

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

Habib Insurance  vs.  Pak Gulf Leasing

Habib Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Habib Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Habib Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pak Gulf Leasing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pak Gulf Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Habib Insurance and Pak Gulf

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

The idea behind Habib Insurance and Pak Gulf Leasing 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.