Correlation Between East West and Unilever Pakistan
Can any of the company-specific risk be diversified away by investing in both East West and Unilever Pakistan 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 East West and Unilever Pakistan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Insurance and Unilever Pakistan Foods, you can compare the effects of market volatilities on East West and Unilever Pakistan 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 East West with a short position of Unilever Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Unilever Pakistan.
Diversification Opportunities for East West and Unilever Pakistan
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Unilever is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Unilever Pakistan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Pakistan Foods and East West 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 East West Insurance are associated (or correlated) with Unilever Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Pakistan Foods has no effect on the direction of East West i.e., East West and Unilever Pakistan go up and down completely randomly.
Pair Corralation between East West and Unilever Pakistan
Assuming the 90 days trading horizon East West Insurance is expected to under-perform the Unilever Pakistan. In addition to that, East West is 1.3 times more volatile than Unilever Pakistan Foods. It trades about -0.16 of its total potential returns per unit of risk. Unilever Pakistan Foods is currently generating about -0.01 per unit of volatility. If you would invest 2,284,371 in Unilever Pakistan Foods on September 3, 2024 and sell it today you would lose (331,370) from holding Unilever Pakistan Foods or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.39% |
| Values | Daily Returns |
East West Insurance vs. Unilever Pakistan Foods
Performance |
| Timeline |
| East West Insurance |
| Unilever Pakistan Foods |
East West and Unilever Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Unilever Pakistan
The main advantage of trading using opposite East West and Unilever Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Unilever Pakistan 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 Unilever Pakistan will offset losses from the drop in Unilever Pakistan's long position.| East West vs. Habib Insurance | East West vs. Pakistan Refinery | East West vs. Century Insurance | East West vs. Al Khair Gadoon Limited |
| Unilever Pakistan vs. Adamjee Insurance | Unilever Pakistan vs. Atlas Insurance | Unilever Pakistan vs. East West Insurance | Unilever Pakistan vs. MCB Bank |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |