Correlation Between Masood Textile and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Masood Textile 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 Masood Textile and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masood Textile Mills and Engro Polymer Chemicals, you can compare the effects of market volatilities on Masood Textile 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 Masood Textile with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Engro Polymer.
Diversification Opportunities for Masood Textile and Engro Polymer
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Masood and Engro is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills 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 Masood Textile 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 Masood Textile Mills 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 Masood Textile i.e., Masood Textile and Engro Polymer go up and down completely randomly.
Pair Corralation between Masood Textile and Engro Polymer
Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 2.63 times more return on investment than Engro Polymer. However, Masood Textile is 2.63 times more volatile than Engro Polymer Chemicals. It trades about 0.04 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 3,472 in Masood Textile Mills on August 24, 2024 and sell it today you would earn a total of 928.00 from holding Masood Textile Mills or generate 26.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.4% |
| Values | Daily Returns |
Masood Textile Mills vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Masood Textile Mills |
| Engro Polymer Chemicals |
Masood Textile and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Engro Polymer
The main advantage of trading using opposite Masood Textile and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile 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.| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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