Correlation Between Orient Rental and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Orient Rental 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 Orient Rental and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Rental Modaraba and Engro Polymer Chemicals, you can compare the effects of market volatilities on Orient Rental 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 Orient Rental with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and Engro Polymer.
Diversification Opportunities for Orient Rental and Engro Polymer
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orient and Engro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba 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 Orient Rental 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 Orient Rental Modaraba 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 Orient Rental i.e., Orient Rental and Engro Polymer go up and down completely randomly.
Pair Corralation between Orient Rental and Engro Polymer
Assuming the 90 days trading horizon Orient Rental Modaraba is expected to generate 2.01 times more return on investment than Engro Polymer. However, Orient Rental is 2.01 times more volatile than Engro Polymer Chemicals. It trades about -0.01 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about -0.34 per unit of risk. If you would invest 810.00 in Orient Rental Modaraba on October 31, 2024 and sell it today you would lose (8.00) from holding Orient Rental Modaraba or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orient Rental Modaraba vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Orient Rental Modaraba |
| Engro Polymer Chemicals |
Orient Rental and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and Engro Polymer
The main advantage of trading using opposite Orient Rental and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental 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.| Orient Rental vs. Masood Textile Mills | Orient Rental vs. Fauji Foods | Orient Rental vs. KSB Pumps | Orient Rental vs. Mari Petroleum |
| Engro Polymer vs. Fauji Foods | Engro Polymer vs. Aisha Steel Mills | Engro Polymer vs. Big Bird Foods | Engro Polymer vs. Matco 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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