Correlation Between Hub Power and Shaheen Insurance

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

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

Diversification Opportunities for Hub Power and Shaheen Insurance

-0.13

Correlation Coefficient

Hub Power  Shaheen Insurance

Good diversification

The 3 months correlation between Hub and Shaheen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and Hub Power 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 Hub Power are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Hub Power i.e., Hub Power and Shaheen Insurance go up and down completely randomly.

Pair Corralation between Hub Power and Shaheen Insurance

Assuming the 90 days trading horizon Hub Power is expected to under-perform the Shaheen Insurance. In addition to that, Hub Power is 1.03 times more volatile than Shaheen Insurance. It trades about -0.07 of its total potential returns per unit of risk. Shaheen Insurance is currently generating about 0.16 per unit of volatility. If you would invest  465.00  in Shaheen Insurance on September 16, 2024 and sell it today you would earn a total of  141.00  from holding Shaheen Insurance or generate 30.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Hub Power  vs.  Shaheen Insurance

Hub Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hub Power 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shaheen Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hub Power and Shaheen Insurance

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

The idea behind Hub Power and Shaheen 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.