Correlation Between EFU General and Atlas Insurance
Can any of the company-specific risk be diversified away by investing in both EFU General and Atlas 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 EFU General and Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFU General Insurance and Atlas Insurance, you can compare the effects of market volatilities on EFU General and Atlas 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 EFU General with a short position of Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Atlas Insurance.
Diversification Opportunities for EFU General and Atlas Insurance
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EFU and Atlas is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Insurance and EFU General 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 EFU General Insurance are associated (or correlated) with Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of EFU General i.e., EFU General and Atlas Insurance go up and down completely randomly.
Pair Corralation between EFU General and Atlas Insurance
Assuming the 90 days trading horizon EFU General is expected to generate 1.39 times less return on investment than Atlas Insurance. In addition to that, EFU General is 2.14 times more volatile than Atlas Insurance. It trades about 0.02 of its total potential returns per unit of risk. Atlas Insurance is currently generating about 0.07 per unit of volatility. If you would invest 5,645 in Atlas Insurance on November 9, 2024 and sell it today you would earn a total of 116.00 from holding Atlas Insurance or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFU General Insurance vs. Atlas Insurance
Performance |
| Timeline |
| EFU General Insurance |
| Atlas Insurance |
EFU General and Atlas Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Atlas Insurance
The main advantage of trading using opposite EFU General and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Atlas 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.| EFU General vs. Ghandhara Automobile | EFU General vs. Premier Insurance | EFU General vs. Pakistan Aluminium Beverage | EFU General vs. Adamjee Insurance |
| Atlas Insurance vs. Honda Atlas Cars | Atlas Insurance vs. Shifa International Hospitals | Atlas Insurance vs. JS Investments | Atlas Insurance vs. Universal Insurance |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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