Correlation Between Engro Polymer and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Crescent Steel 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 Crescent Steel 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 Crescent Steel Allied, you can compare the effects of market volatilities on Engro Polymer and Crescent Steel 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 Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Crescent Steel.
Diversification Opportunities for Engro Polymer and Crescent Steel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Engro and Crescent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Crescent Steel Allied in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Steel Allied 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 Crescent Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Steel Allied has no effect on the direction of Engro Polymer i.e., Engro Polymer and Crescent Steel go up and down completely randomly.
Pair Corralation between Engro Polymer and Crescent Steel
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Crescent Steel. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 3.57 times less risky than Crescent Steel. The stock trades about -0.13 of its potential returns per unit of risk. The Crescent Steel Allied is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,331 in Crescent Steel Allied on October 25, 2024 and sell it today you would earn a total of 163.00 from holding Crescent Steel Allied or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Crescent Steel Allied
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Crescent Steel Allied |
Engro Polymer and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Crescent Steel
The main advantage of trading using opposite Engro Polymer and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Crescent Steel 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 Crescent Steel will offset losses from the drop in Crescent Steel's long position.| Engro Polymer vs. MCB Investment Manag | Engro Polymer vs. Fateh Sports Wear | Engro Polymer vs. Ittehad Chemicals | Engro Polymer vs. Murree Brewery |
| Crescent Steel vs. Engro Polymer Chemicals | Crescent Steel vs. ITTEFAQ Iron Industries | Crescent Steel vs. Aisha Steel Mills | Crescent Steel vs. Honda Atlas Cars |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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