Correlation Between International Steels and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both International Steels 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 International Steels and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and Engro Polymer Chemicals, you can compare the effects of market volatilities on International Steels 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 International Steels with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and Engro Polymer.
Diversification Opportunities for International Steels and Engro Polymer
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between International and Engro is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding International Steels 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 International Steels 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 International Steels 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 International Steels i.e., International Steels and Engro Polymer go up and down completely randomly.
Pair Corralation between International Steels and Engro Polymer
Assuming the 90 days trading horizon International Steels is expected to under-perform the Engro Polymer. In addition to that, International Steels is 1.92 times more volatile than Engro Polymer Chemicals. It trades about -0.45 of its total potential returns per unit of risk. Engro Polymer Chemicals is currently generating about -0.37 per unit of volatility. If you would invest 3,690 in Engro Polymer Chemicals on November 5, 2024 and sell it today you would lose (246.00) from holding Engro Polymer Chemicals or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Steels vs. Engro Polymer Chemicals
Performance |
| Timeline |
| International Steels |
| Engro Polymer Chemicals |
International Steels and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and Engro Polymer
The main advantage of trading using opposite International Steels and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels 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.| International Steels vs. Allied Bank | International Steels vs. MCB Bank | International Steels vs. Dost Steels | International Steels vs. Crescent Star Insurance |
| Engro Polymer vs. Fateh Sports Wear | Engro Polymer vs. Pakistan Synthetics | Engro Polymer vs. Ghani Chemical Industries | Engro Polymer vs. Lotte Chemical Pakistan |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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