Correlation Between Loads and EFU General
Can any of the company-specific risk be diversified away by investing in both Loads and EFU General 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 Loads and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loads and EFU General Insurance, you can compare the effects of market volatilities on Loads and EFU General 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 Loads with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loads and EFU General.
Diversification Opportunities for Loads and EFU General
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loads and EFU is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Loads and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Loads 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 Loads are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Loads i.e., Loads and EFU General go up and down completely randomly.
Pair Corralation between Loads and EFU General
Assuming the 90 days trading horizon Loads is expected to generate 1.36 times less return on investment than EFU General. But when comparing it to its historical volatility, Loads is 1.29 times less risky than EFU General. It trades about 0.32 of its potential returns per unit of risk. EFU General Insurance is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 8,909 in EFU General Insurance on August 25, 2024 and sell it today you would earn a total of 3,591 from holding EFU General Insurance or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loads vs. EFU General Insurance
Performance |
| Timeline |
| Loads |
| EFU General Insurance |
Loads and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loads and EFU General
The main advantage of trading using opposite Loads and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loads position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| Loads vs. Air Link Communication | Loads vs. Sardar Chemical Industries | Loads vs. Avanceon | Loads vs. AKD Hospitality |
| EFU General vs. Habib Bank | EFU General vs. National Bank of | EFU General vs. United Bank | EFU General 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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