Correlation Between EFU General and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both EFU General and ORIX 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 ORIX 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 ORIX Leasing Pakistan, you can compare the effects of market volatilities on EFU General and ORIX 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 ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and ORIX Leasing.
Diversification Opportunities for EFU General and ORIX Leasing
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EFU and ORIX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan 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 ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of EFU General i.e., EFU General and ORIX Leasing go up and down completely randomly.
Pair Corralation between EFU General and ORIX Leasing
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 1.71 times more return on investment than ORIX Leasing. However, EFU General is 1.71 times more volatile than ORIX Leasing Pakistan. It trades about 0.1 of its potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.15 per unit of risk. If you would invest 7,559 in EFU General Insurance on August 31, 2024 and sell it today you would earn a total of 5,930 from holding EFU General Insurance or generate 78.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 70.83% |
| Values | Daily Returns |
EFU General Insurance vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| EFU General Insurance |
| ORIX Leasing Pakistan |
EFU General and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and ORIX Leasing
The main advantage of trading using opposite EFU General and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, ORIX 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 ORIX Leasing will offset losses from the drop in ORIX 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 |
| ORIX Leasing vs. Masood Textile Mills | ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. KSB Pumps | ORIX 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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