Correlation Between Hub Power and Engro
Can any of the company-specific risk be diversified away by investing in both Hub Power 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 Hub Power and Engro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Power and Engro, you can compare the effects of market volatilities on Hub Power 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 Hub Power with a short position of Engro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub Power and Engro.
Diversification Opportunities for Hub Power and Engro
Good diversification
The 3 months correlation between Hub and Engro is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Engro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engro and Hub Power 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 Hub Power 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 Hub Power i.e., Hub Power and Engro go up and down completely randomly.
Pair Corralation between Hub Power and Engro
Assuming the 90 days trading horizon Hub Power is expected to generate 1.33 times more return on investment than Engro. However, Hub Power is 1.33 times more volatile than Engro. It trades about 0.1 of its potential returns per unit of risk. Engro is currently generating about 0.07 per unit of risk. If you would invest 6,148 in Hub Power on August 28, 2024 and sell it today you would earn a total of 4,926 from holding Hub Power or generate 80.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Power vs. Engro
Performance |
| Timeline |
| Hub Power |
| Engro |
Hub Power and Engro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub Power and Engro
The main advantage of trading using opposite Hub Power and Engro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Power 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.| Hub Power vs. Pakistan State Oil | Hub Power vs. Oil and Gas | Hub Power vs. Lucky Cement | Hub Power vs. Engro |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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