Correlation Between Engro Polymer and Frieslandcampina
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Frieslandcampina 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 Frieslandcampina 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 Frieslandcampina, you can compare the effects of market volatilities on Engro Polymer and Frieslandcampina 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 Frieslandcampina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Frieslandcampina.
Diversification Opportunities for Engro Polymer and Frieslandcampina
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engro and Frieslandcampina is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Frieslandcampina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frieslandcampina 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 Frieslandcampina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frieslandcampina has no effect on the direction of Engro Polymer i.e., Engro Polymer and Frieslandcampina go up and down completely randomly.
Pair Corralation between Engro Polymer and Frieslandcampina
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to generate 0.7 times more return on investment than Frieslandcampina. However, Engro Polymer Chemicals is 1.44 times less risky than Frieslandcampina. It trades about 0.23 of its potential returns per unit of risk. Frieslandcampina is currently generating about 0.03 per unit of risk. If you would invest 3,215 in Engro Polymer Chemicals on September 4, 2024 and sell it today you would earn a total of 500.00 from holding Engro Polymer Chemicals or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Frieslandcampina
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Frieslandcampina |
Engro Polymer and Frieslandcampina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Frieslandcampina
The main advantage of trading using opposite Engro Polymer and Frieslandcampina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Frieslandcampina 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 Frieslandcampina will offset losses from the drop in Frieslandcampina's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Frieslandcampina vs. Sitara Chemical Industries | Frieslandcampina vs. Nimir Industrial Chemical | Frieslandcampina vs. Sardar Chemical Industries | Frieslandcampina 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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