Correlation Between Nimir Industrial and Habib Bank

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

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

Diversification Opportunities for Nimir Industrial and Habib Bank

-0.16

Correlation Coefficient

Nimir Industrial  Habib Bank

Good diversification

The 3 months correlation between Nimir and Habib is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Habib Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habib Bank and Nimir Industrial 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 Nimir Industrial Chemical are associated (or correlated) with Habib Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habib Bank has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Habib Bank go up and down completely randomly.

Pair Corralation between Nimir Industrial and Habib Bank

Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to generate 1.61 times more return on investment than Habib Bank. However, Nimir Industrial is 1.61 times more volatile than Habib Bank. It trades about 0.04 of its potential returns per unit of risk. Habib Bank is currently generating about 0.01 per unit of risk. If you would invest  13,316  in Nimir Industrial Chemical on December 27, 2024 and sell it today you would earn a total of  533.00  from holding Nimir Industrial Chemical or generate 4.0% return on investment over 90 days.

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

Nimir Industrial Chemical  vs.  Habib Bank

Nimir Industrial Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nimir Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Habib Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Habib Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Habib Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nimir Industrial and Habib Bank

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

The idea behind Nimir Industrial Chemical and Habib 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.