Correlation Between EFU General and Pakistan Aluminium
Can any of the company-specific risk be diversified away by investing in both EFU General and Pakistan Aluminium 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 Pakistan Aluminium 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 Pakistan Aluminium Beverage, you can compare the effects of market volatilities on EFU General and Pakistan Aluminium 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 Pakistan Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Pakistan Aluminium.
Diversification Opportunities for EFU General and Pakistan Aluminium
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EFU and Pakistan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Pakistan Aluminium Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Aluminium 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 Pakistan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Aluminium has no effect on the direction of EFU General i.e., EFU General and Pakistan Aluminium go up and down completely randomly.
Pair Corralation between EFU General and Pakistan Aluminium
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 2.13 times more return on investment than Pakistan Aluminium. However, EFU General is 2.13 times more volatile than Pakistan Aluminium Beverage. It trades about 0.4 of its potential returns per unit of risk. Pakistan Aluminium Beverage is currently generating about -0.12 per unit of risk. If you would invest 8,855 in EFU General Insurance on August 28, 2024 and sell it today you would earn a total of 4,191 from holding EFU General Insurance or generate 47.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFU General Insurance vs. Pakistan Aluminium Beverage
Performance |
| Timeline |
| EFU General Insurance |
| Pakistan Aluminium |
EFU General and Pakistan Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Pakistan Aluminium
The main advantage of trading using opposite EFU General and Pakistan Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Pakistan Aluminium 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 Pakistan Aluminium will offset losses from the drop in Pakistan Aluminium's long position.| EFU General vs. Habib Bank | EFU General vs. National Bank of | EFU General vs. United Bank | EFU General vs. MCB Bank |
| Pakistan Aluminium vs. Habib Insurance | Pakistan Aluminium vs. Century Insurance | Pakistan Aluminium vs. Reliance Weaving Mills | Pakistan Aluminium vs. Media Times |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |