Correlation Between Engro and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Engro and Mari Petroleum 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 Engro and Mari Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engro and Mari Petroleum, you can compare the effects of market volatilities on Engro and Mari Petroleum 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 Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro and Mari Petroleum.
Diversification Opportunities for Engro and Mari Petroleum
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Engro and Mari is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Engro and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum 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 Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Engro i.e., Engro and Mari Petroleum go up and down completely randomly.
Pair Corralation between Engro and Mari Petroleum
Assuming the 90 days trading horizon Engro is expected to generate 7.35 times less return on investment than Mari Petroleum. But when comparing it to its historical volatility, Engro is 3.56 times less risky than Mari Petroleum. It trades about 0.07 of its potential returns per unit of risk. Mari Petroleum is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,483 in Mari Petroleum on August 28, 2024 and sell it today you would earn a total of 41,181 from holding Mari Petroleum or generate 918.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engro vs. Mari Petroleum
Performance |
| Timeline |
| Engro |
| Mari Petroleum |
Engro and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro and Mari Petroleum
The main advantage of trading using opposite Engro and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro position performs unexpectedly, Mari Petroleum 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 Mari Petroleum will offset losses from the drop in Mari Petroleum's long position.The idea behind Engro and Mari Petroleum pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mari Petroleum vs. Shifa International Hospitals | Mari Petroleum vs. Honda Atlas Cars | Mari Petroleum vs. AKD Hospitality | Mari Petroleum vs. Jubilee Life Insurance |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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