Correlation Between Engro Polymer and Loads
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Loads 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 Loads 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 Loads, you can compare the effects of market volatilities on Engro Polymer and Loads 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 Loads. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Loads.
Diversification Opportunities for Engro Polymer and Loads
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Engro and Loads is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads 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 Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of Engro Polymer i.e., Engro Polymer and Loads go up and down completely randomly.
Pair Corralation between Engro Polymer and Loads
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Loads. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 1.88 times less risky than Loads. The stock trades about 0.0 of its potential returns per unit of risk. The Loads is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 682.00 in Loads on September 1, 2024 and sell it today you would earn a total of 679.00 from holding Loads or generate 99.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Loads
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Loads |
Engro Polymer and Loads Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Loads
The main advantage of trading using opposite Engro Polymer and Loads positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Loads 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 Loads will offset losses from the drop in Loads' long position.| Engro Polymer vs. Ittehad Chemicals | Engro Polymer vs. Pakistan Telecommunication | Engro Polymer vs. IBL HealthCare | Engro Polymer vs. AKD Hospitality |
| Loads vs. Khyber Tobacco | Loads vs. Sitara Chemical Industries | Loads vs. Unilever Pakistan Foods | Loads vs. ORIX Leasing Pakistan |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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