Correlation Between Fauji Foods and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Fauji Foods and Engro Polymer 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 Fauji Foods and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fauji Foods and Engro Polymer Chemicals, you can compare the effects of market volatilities on Fauji Foods and Engro Polymer 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 Fauji Foods with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Foods and Engro Polymer.
Diversification Opportunities for Fauji Foods and Engro Polymer
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fauji and Engro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Foods and Engro Polymer Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engro Polymer Chemicals and Fauji Foods 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 Fauji Foods are associated (or correlated) with Engro Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engro Polymer Chemicals has no effect on the direction of Fauji Foods i.e., Fauji Foods and Engro Polymer go up and down completely randomly.
Pair Corralation between Fauji Foods and Engro Polymer
Assuming the 90 days trading horizon Fauji Foods is expected to generate 1.52 times more return on investment than Engro Polymer. However, Fauji Foods is 1.52 times more volatile than Engro Polymer Chemicals. It trades about 0.07 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about 0.0 per unit of risk. If you would invest 559.00 in Fauji Foods on August 28, 2024 and sell it today you would earn a total of 667.00 from holding Fauji Foods or generate 119.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Foods vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Fauji Foods |
| Engro Polymer Chemicals |
Fauji Foods and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Foods and Engro Polymer
The main advantage of trading using opposite Fauji Foods and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Foods position performs unexpectedly, Engro Polymer 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 Engro Polymer will offset losses from the drop in Engro Polymer's long position.| Fauji Foods vs. Pak Gulf Leasing | Fauji Foods vs. Air Link Communication | Fauji Foods vs. Shifa International Hospitals | Fauji Foods vs. Grays Leasing |
| Engro Polymer vs. Honda Atlas Cars | Engro Polymer vs. Jubilee Life Insurance | Engro Polymer vs. JS Investments | Engro Polymer vs. 786 Investment Limited |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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