Correlation Between Engro Polymer and KOT Addu
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and KOT Addu 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 KOT Addu 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 KOT Addu Power, you can compare the effects of market volatilities on Engro Polymer and KOT Addu 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 KOT Addu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and KOT Addu.
Diversification Opportunities for Engro Polymer and KOT Addu
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Engro and KOT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and KOT Addu Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOT Addu Power 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 KOT Addu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOT Addu Power has no effect on the direction of Engro Polymer i.e., Engro Polymer and KOT Addu go up and down completely randomly.
Pair Corralation between Engro Polymer and KOT Addu
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the KOT Addu. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 1.03 times less risky than KOT Addu. The stock trades about 0.0 of its potential returns per unit of risk. The KOT Addu Power is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,545 in KOT Addu Power on November 29, 2024 and sell it today you would earn a total of 2,226 from holding KOT Addu Power or generate 144.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. KOT Addu Power
Performance |
| Timeline |
| Engro Polymer Chemicals |
| KOT Addu Power |
Engro Polymer and KOT Addu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and KOT Addu
The main advantage of trading using opposite Engro Polymer and KOT Addu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, KOT Addu 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 KOT Addu will offset losses from the drop in KOT Addu's long position.| Engro Polymer vs. International Steels | Engro Polymer vs. Bawany Air Products | Engro Polymer vs. Metropolitan Steel Corp | Engro Polymer vs. Pakistan Synthetics |
| KOT Addu vs. Matco Foods | KOT Addu vs. Fauji Foods | KOT Addu vs. Wah Nobel Chemicals | KOT Addu 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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