Correlation Between Engro and Pakistan Petroleum
Can any of the company-specific risk be diversified away by investing in both Engro and Pakistan 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 Pakistan Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engro and Pakistan Petroleum, you can compare the effects of market volatilities on Engro and Pakistan 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 Pakistan Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro and Pakistan Petroleum.
Diversification Opportunities for Engro and Pakistan Petroleum
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engro and Pakistan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Engro and Pakistan Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan 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 Pakistan Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Petroleum has no effect on the direction of Engro i.e., Engro and Pakistan Petroleum go up and down completely randomly.
Pair Corralation between Engro and Pakistan Petroleum
If you would invest 48,538 in Engro on November 5, 2024 and sell it today you would earn a total of 0.00 from holding Engro or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Engro vs. Pakistan Petroleum
Performance |
| Timeline |
| Engro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| Pakistan Petroleum |
Engro and Pakistan Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro and Pakistan Petroleum
The main advantage of trading using opposite Engro and Pakistan Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro position performs unexpectedly, Pakistan 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 Pakistan Petroleum will offset losses from the drop in Pakistan Petroleum's long position.| Engro vs. JS Investments | Engro vs. Amreli Steels | Engro vs. ITTEFAQ Iron Industries | Engro vs. Wah Nobel Chemicals |
| Pakistan Petroleum vs. Adamjee Insurance | Pakistan Petroleum vs. Lotte Chemical Pakistan | Pakistan Petroleum vs. EFU General Insurance | Pakistan Petroleum vs. Pakistan Synthetics |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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