Correlation Between EFU General and Pakistan Synthetics
Can any of the company-specific risk be diversified away by investing in both EFU General and Pakistan Synthetics 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 Synthetics 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 Synthetics, you can compare the effects of market volatilities on EFU General and Pakistan Synthetics 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 Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Pakistan Synthetics.
Diversification Opportunities for EFU General and Pakistan Synthetics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EFU and Pakistan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Pakistan Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Synthetics 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 Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Synthetics has no effect on the direction of EFU General i.e., EFU General and Pakistan Synthetics go up and down completely randomly.
Pair Corralation between EFU General and Pakistan Synthetics
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 0.9 times more return on investment than Pakistan Synthetics. However, EFU General Insurance is 1.11 times less risky than Pakistan Synthetics. It trades about 0.04 of its potential returns per unit of risk. Pakistan Synthetics is currently generating about 0.0 per unit of risk. If you would invest 11,419 in EFU General Insurance on November 8, 2024 and sell it today you would earn a total of 193.00 from holding EFU General Insurance or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFU General Insurance vs. Pakistan Synthetics
Performance |
| Timeline |
| EFU General Insurance |
| Pakistan Synthetics |
EFU General and Pakistan Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFU General and Pakistan Synthetics
The main advantage of trading using opposite EFU General and Pakistan Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Pakistan Synthetics 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 Synthetics will offset losses from the drop in Pakistan Synthetics' long position.| EFU General vs. Dost Steels | EFU General vs. JS Investments | EFU General vs. Packages | EFU General vs. Hi Tech Lubricants |
| Pakistan Synthetics vs. Sardar Chemical Industries | Pakistan Synthetics vs. Sitara Chemical Industries | Pakistan Synthetics vs. Lotte Chemical Pakistan | Pakistan Synthetics vs. Ghani Chemical Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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