Correlation Between Matco Foods and Habib Insurance

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

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

Diversification Opportunities for Matco Foods and Habib Insurance

-0.04

Correlation Coefficient

Matco Foods  Habib Insurance

Good diversification

The 3 months correlation between Matco and Habib is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Habib Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Insurance and Matco Foods 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 Matco Foods are associated (or correlated) with Habib Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Insurance has no effect on the direction of Matco Foods i.e., Matco Foods and Habib Insurance go up and down completely randomly.

Pair Corralation between Matco Foods and Habib Insurance

Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Habib Insurance. In addition to that, Matco Foods is 1.19 times more volatile than Habib Insurance. It trades about 0.0 of its total potential returns per unit of risk. Habib Insurance is currently generating about 0.1 per unit of volatility. If you would invest  790.00  in Habib Insurance on December 21, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Matco Foods  vs.  Habib Insurance

Matco Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matco Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Matco Foods is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Matco Foods and Habib Insurance

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

The idea behind Matco Foods and Habib 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.