Correlation Between EFU General and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both EFU General and Grays Leasing 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 Grays Leasing 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 Grays Leasing, you can compare the effects of market volatilities on EFU General and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Grays Leasing.
Diversification Opportunities for EFU General and Grays Leasing
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EFU and Grays is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of EFU General i.e., EFU General and Grays Leasing go up and down completely randomly.
Pair Corralation between EFU General and Grays Leasing
Assuming the 90 days trading horizon EFU General is expected to generate 1.49 times less return on investment than Grays Leasing. But when comparing it to its historical volatility, EFU General Insurance is 2.41 times less risky than Grays Leasing. It trades about 0.1 of its potential returns per unit of risk. Grays Leasing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Grays Leasing on August 31, 2024 and sell it today you would earn a total of 132.00 from holding Grays Leasing or generate 42.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.08% |
| Values | Daily Returns |
EFU General Insurance vs. Grays Leasing
Performance |
| Timeline |
| EFU General Insurance |
| Grays Leasing |
EFU General and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Grays Leasing
The main advantage of trading using opposite EFU General and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| EFU General vs. Habib Bank | EFU General vs. National Bank of | EFU General vs. United Bank | EFU General vs. MCB Bank |
| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing vs. Mari Petroleum |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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