Correlation Between Ghani Chemical and Engro
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and Engro 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 Ghani Chemical and Engro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghani Chemical Industries and Engro, you can compare the effects of market volatilities on Ghani Chemical and Engro 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 Ghani Chemical with a short position of Engro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and Engro.
Diversification Opportunities for Ghani Chemical and Engro
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ghani and Engro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and Engro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engro and Ghani Chemical 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 Ghani Chemical Industries are associated (or correlated) with Engro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engro has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and Engro go up and down completely randomly.
Pair Corralation between Ghani Chemical and Engro
Assuming the 90 days trading horizon Ghani Chemical is expected to generate 2.91 times less return on investment than Engro. In addition to that, Ghani Chemical is 1.63 times more volatile than Engro. It trades about 0.1 of its total potential returns per unit of risk. Engro is currently generating about 0.5 per unit of volatility. If you would invest 42,789 in Engro on October 25, 2024 and sell it today you would earn a total of 5,749 from holding Engro or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.0% |
| Values | Daily Returns |
Ghani Chemical Industries vs. Engro
Performance |
| Timeline |
| Ghani Chemical Industries |
| Engro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Ghani Chemical and Engro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and Engro
The main advantage of trading using opposite Ghani Chemical and Engro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, Engro 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 will offset losses from the drop in Engro's long position.| Ghani Chemical vs. JS Bank | Ghani Chemical vs. Crescent Star Insurance | Ghani Chemical vs. Oil and Gas | Ghani Chemical vs. Century Insurance |
| Engro vs. 786 Investment Limited | Engro vs. Amreli Steels | Engro vs. Ghani Chemical Industries | Engro vs. Big Bird Foods |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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