Correlation Between Engro Polymer and Big Bird
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Big Bird 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 Big Bird 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 Big Bird Foods, you can compare the effects of market volatilities on Engro Polymer and Big Bird 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 Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Big Bird.
Diversification Opportunities for Engro Polymer and Big Bird
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Engro and Big is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods 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 Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Engro Polymer i.e., Engro Polymer and Big Bird go up and down completely randomly.
Pair Corralation between Engro Polymer and Big Bird
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Big Bird. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 2.11 times less risky than Big Bird. The stock trades about -0.03 of its potential returns per unit of risk. The Big Bird Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,232 in Big Bird Foods on August 26, 2024 and sell it today you would earn a total of 951.00 from holding Big Bird Foods or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.78% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Big Bird Foods
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Big Bird Foods |
Engro Polymer and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Big Bird
The main advantage of trading using opposite Engro Polymer and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
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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