Correlation Between Engro Polymer and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Faysal Bank 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 Faysal Bank 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 Faysal Bank, you can compare the effects of market volatilities on Engro Polymer and Faysal Bank 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 Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Faysal Bank.
Diversification Opportunities for Engro Polymer and Faysal Bank
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Engro and Faysal is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank 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 Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Engro Polymer i.e., Engro Polymer and Faysal Bank go up and down completely randomly.
Pair Corralation between Engro Polymer and Faysal Bank
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to generate 0.98 times more return on investment than Faysal Bank. However, Engro Polymer Chemicals is 1.02 times less risky than Faysal Bank. It trades about 0.2 of its potential returns per unit of risk. Faysal Bank is currently generating about -0.12 per unit of risk. If you would invest 3,178 in Engro Polymer Chemicals on August 30, 2024 and sell it today you would earn a total of 424.00 from holding Engro Polymer Chemicals or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Faysal Bank
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Faysal Bank |
Engro Polymer and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Faysal Bank
The main advantage of trading using opposite Engro Polymer and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Faysal Bank vs. Jubilee Life Insurance | Faysal Bank vs. EFU General Insurance | Faysal Bank vs. Wah Nobel Chemicals | Faysal Bank vs. Engro Polymer Chemicals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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