Correlation Between EFU General and Honda Atlas
Can any of the company-specific risk be diversified away by investing in both EFU General and Honda Atlas 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 Honda Atlas 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 Honda Atlas Cars, you can compare the effects of market volatilities on EFU General and Honda Atlas 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 Honda Atlas. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Honda Atlas.
Diversification Opportunities for EFU General and Honda Atlas
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EFU and Honda is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Honda Atlas Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Atlas Cars 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 Honda Atlas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Atlas Cars has no effect on the direction of EFU General i.e., EFU General and Honda Atlas go up and down completely randomly.
Pair Corralation between EFU General and Honda Atlas
Assuming the 90 days trading horizon EFU General is expected to generate 1.21 times less return on investment than Honda Atlas. But when comparing it to its historical volatility, EFU General Insurance is 1.1 times less risky than Honda Atlas. It trades about 0.07 of its potential returns per unit of risk. Honda Atlas Cars is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12,444 in Honda Atlas Cars on November 5, 2024 and sell it today you would earn a total of 17,306 from holding Honda Atlas Cars or generate 139.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 70.19% |
| Values | Daily Returns |
EFU General Insurance vs. Honda Atlas Cars
Performance |
| Timeline |
| EFU General Insurance |
| Honda Atlas Cars |
EFU General and Honda Atlas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Honda Atlas
The main advantage of trading using opposite EFU General and Honda Atlas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Honda Atlas 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 Honda Atlas will offset losses from the drop in Honda Atlas' long position.| EFU General vs. Masood Textile Mills | EFU General vs. Fauji Foods | EFU General vs. KSB Pumps | EFU General vs. Mari Petroleum |
| Honda Atlas vs. Beco Steel | Honda Atlas vs. Agha Steel Industries | Honda Atlas vs. Fateh Sports Wear | Honda Atlas vs. Crescent Steel Allied |
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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