Correlation Between Engro Polymer and Shifa International
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Shifa International 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 Shifa International 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 Shifa International Hospitals, you can compare the effects of market volatilities on Engro Polymer and Shifa International 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 Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Shifa International.
Diversification Opportunities for Engro Polymer and Shifa International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Engro and Shifa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International 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 Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Engro Polymer i.e., Engro Polymer and Shifa International go up and down completely randomly.
Pair Corralation between Engro Polymer and Shifa International
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Shifa International. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 2.8 times less risky than Shifa International. The stock trades about -0.12 of its potential returns per unit of risk. The Shifa International Hospitals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 37,316 in Shifa International Hospitals on October 21, 2024 and sell it today you would earn a total of 2,273 from holding Shifa International Hospitals or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Shifa International Hospitals
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Shifa International |
Engro Polymer and Shifa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Shifa International
The main advantage of trading using opposite Engro Polymer and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.| Engro Polymer vs. Unity Foods | Engro Polymer vs. Oil and Gas | Engro Polymer vs. Fateh Sports Wear | Engro Polymer vs. Packages |
| Shifa International vs. Wah Nobel Chemicals | Shifa International vs. Pakistan Telecommunication | Shifa International vs. Amreli Steels | Shifa International vs. Ittehad 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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