Correlation Between Loads and Habib Metropolitan

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

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

Diversification Opportunities for Loads and Habib Metropolitan

0.85

Correlation Coefficient

Loads  Habib Metropolitan

Very poor diversification

The 3 months correlation between Loads and Habib is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Loads and Habib Metropolitan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Metropolitan Bank and Loads 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 Loads are associated (or correlated) with Habib Metropolitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Metropolitan Bank has no effect on the direction of Loads i.e., Loads and Habib Metropolitan go up and down completely randomly.

Pair Corralation between Loads and Habib Metropolitan

Assuming the 90 days trading horizon Loads is expected to generate 1.77 times more return on investment than Habib Metropolitan. However, Loads is 1.77 times more volatile than Habib Metropolitan Bank. It trades about 0.13 of its potential returns per unit of risk. Habib Metropolitan Bank is currently generating about 0.11 per unit of risk. If you would invest  933.00  in Loads on September 29, 2024 and sell it today you would earn a total of  583.00  from holding Loads or generate 62.49% return on investment over 90 days.

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

Loads  vs.  Habib Metropolitan Bank

Loads

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

Habib Metropolitan Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Habib Metropolitan Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Habib Metropolitan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loads and Habib Metropolitan

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

The idea behind Loads and Habib Metropolitan 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.