Correlation Between Engro Polymer and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Mari Petroleum 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 Mari Petroleum 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 Mari Petroleum, you can compare the effects of market volatilities on Engro Polymer and Mari Petroleum 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 Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Mari Petroleum.
Diversification Opportunities for Engro Polymer and Mari Petroleum
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Engro and Mari is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum 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 Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Engro Polymer i.e., Engro Polymer and Mari Petroleum go up and down completely randomly.
Pair Corralation between Engro Polymer and Mari Petroleum
Assuming the 90 days trading horizon Engro Polymer is expected to generate 73.71 times less return on investment than Mari Petroleum. But when comparing it to its historical volatility, Engro Polymer Chemicals is 3.3 times less risky than Mari Petroleum. It trades about 0.01 of its potential returns per unit of risk. Mari Petroleum is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 24,609 in Mari Petroleum on September 3, 2024 and sell it today you would earn a total of 21,613 from holding Mari Petroleum or generate 87.83% 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. Mari Petroleum
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Mari Petroleum |
Engro Polymer and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Mari Petroleum
The main advantage of trading using opposite Engro Polymer and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Mari Petroleum 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 Mari Petroleum will offset losses from the drop in Mari Petroleum's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Mari Petroleum vs. Oil and Gas | Mari Petroleum vs. Pakistan State Oil | Mari Petroleum vs. Pakistan Petroleum | Mari Petroleum vs. Fauji Fertilizer |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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