Correlation Between Engro Polymer and Avanceon
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Avanceon 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 Polymer and Avanceon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engro Polymer Chemicals and Avanceon, you can compare the effects of market volatilities on Engro Polymer and Avanceon 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 Polymer with a short position of Avanceon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Avanceon.
Diversification Opportunities for Engro Polymer and Avanceon
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engro and Avanceon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Avanceon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanceon and Engro Polymer 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 Polymer Chemicals are associated (or correlated) with Avanceon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanceon has no effect on the direction of Engro Polymer i.e., Engro Polymer and Avanceon go up and down completely randomly.
Pair Corralation between Engro Polymer and Avanceon
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Avanceon. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 1.82 times less risky than Avanceon. The stock trades about -0.3 of its potential returns per unit of risk. The Avanceon is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,881 in Avanceon on November 7, 2024 and sell it today you would lose (78.00) from holding Avanceon or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Avanceon
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Avanceon |
Engro Polymer and Avanceon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Avanceon
The main advantage of trading using opposite Engro Polymer and Avanceon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Avanceon 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 Avanceon will offset losses from the drop in Avanceon's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Avanceon vs. Unilever Pakistan Foods | Avanceon vs. Murree Brewery | Avanceon vs. Nimir Industrial Chemical | Avanceon vs. National Foods |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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