Correlation Between Engro and ITTEFAQ Iron
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By analyzing existing cross correlation between Engro and ITTEFAQ Iron Industries, you can compare the effects of market volatilities on Engro and ITTEFAQ Iron 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 Engro with a short position of ITTEFAQ Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro and ITTEFAQ Iron.
Diversification Opportunities for Engro and ITTEFAQ Iron
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Engro and ITTEFAQ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Engro and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and Engro 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 Engro are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of Engro i.e., Engro and ITTEFAQ Iron go up and down completely randomly.
Pair Corralation between Engro and ITTEFAQ Iron
Assuming the 90 days trading horizon Engro is expected to generate 0.55 times more return on investment than ITTEFAQ Iron. However, Engro is 1.8 times less risky than ITTEFAQ Iron. It trades about 0.13 of its potential returns per unit of risk. ITTEFAQ Iron Industries is currently generating about 0.04 per unit of risk. If you would invest 25,617 in Engro on October 25, 2024 and sell it today you would earn a total of 22,921 from holding Engro or generate 89.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.03% |
| Values | Daily Returns |
Engro vs. ITTEFAQ Iron Industries
Performance |
| Timeline |
| Engro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| ITTEFAQ Iron Industries |
Engro and ITTEFAQ Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro and ITTEFAQ Iron
The main advantage of trading using opposite Engro and ITTEFAQ Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro position performs unexpectedly, ITTEFAQ Iron 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 ITTEFAQ Iron will offset losses from the drop in ITTEFAQ Iron's long position.| Engro vs. 786 Investment Limited | Engro vs. Amreli Steels | Engro vs. Ghani Chemical Industries | Engro vs. Big Bird Foods |
| ITTEFAQ Iron vs. Hi Tech Lubricants | ITTEFAQ Iron vs. Air Link Communication | ITTEFAQ Iron vs. Packages | ITTEFAQ Iron vs. International Steels |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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