Correlation Between EFU General and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both EFU General and Nimir Industrial 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 Nimir Industrial 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 Nimir Industrial Chemical, you can compare the effects of market volatilities on EFU General and Nimir Industrial 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 Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Nimir Industrial.
Diversification Opportunities for EFU General and Nimir Industrial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EFU and Nimir is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical 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 Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of EFU General i.e., EFU General and Nimir Industrial go up and down completely randomly.
Pair Corralation between EFU General and Nimir Industrial
Assuming the 90 days trading horizon EFU General is expected to generate 1.04 times less return on investment than Nimir Industrial. But when comparing it to its historical volatility, EFU General Insurance is 1.14 times less risky than Nimir Industrial. It trades about 0.07 of its potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,694 in Nimir Industrial Chemical on August 27, 2024 and sell it today you would earn a total of 6,306 from holding Nimir Industrial Chemical or generate 94.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 74.22% |
| Values | Daily Returns |
EFU General Insurance vs. Nimir Industrial Chemical
Performance |
| Timeline |
| EFU General Insurance |
| Nimir Industrial Chemical |
EFU General and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Nimir Industrial
The main advantage of trading using opposite EFU General and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.| EFU General vs. Habib Bank | EFU General vs. National Bank of | EFU General vs. United Bank | EFU General vs. MCB Bank |
| Nimir Industrial vs. Unilever Pakistan Foods | Nimir Industrial vs. Hi Tech Lubricants | Nimir Industrial vs. Crescent Star Insurance | Nimir Industrial vs. Honda Atlas Cars |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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