Correlation Between Century Insurance and Pakistan Engineering
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Pakistan Engineering 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 Century Insurance and Pakistan Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Pakistan Engineering, you can compare the effects of market volatilities on Century Insurance and Pakistan Engineering 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 Century Insurance with a short position of Pakistan Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Pakistan Engineering.
Diversification Opportunities for Century Insurance and Pakistan Engineering
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Pakistan is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Pakistan Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Engineering and Century 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 Century Insurance are associated (or correlated) with Pakistan Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Engineering has no effect on the direction of Century Insurance i.e., Century Insurance and Pakistan Engineering go up and down completely randomly.
Pair Corralation between Century Insurance and Pakistan Engineering
Assuming the 90 days trading horizon Century Insurance is expected to generate 0.78 times more return on investment than Pakistan Engineering. However, Century Insurance is 1.28 times less risky than Pakistan Engineering. It trades about 0.3 of its potential returns per unit of risk. Pakistan Engineering is currently generating about -0.16 per unit of risk. If you would invest 3,276 in Century Insurance on September 12, 2024 and sell it today you would earn a total of 473.00 from holding Century Insurance or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Century Insurance vs. Pakistan Engineering
Performance |
| Timeline |
| Century Insurance |
| Pakistan Engineering |
Century Insurance and Pakistan Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Pakistan Engineering
The main advantage of trading using opposite Century Insurance and Pakistan Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Pakistan Engineering 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 Pakistan Engineering will offset losses from the drop in Pakistan Engineering's long position.| Century Insurance vs. Masood Textile Mills | Century Insurance vs. Fauji Foods | Century Insurance vs. KSB Pumps | Century Insurance vs. Mari Petroleum |
| Pakistan Engineering vs. EFU General Insurance | Pakistan Engineering vs. Security Investment Bank | Pakistan Engineering vs. National Bank of | Pakistan Engineering vs. Bank of Punjab |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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