Correlation Between Pak Gulf and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Pak Gulf 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 Pak Gulf and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Gulf Leasing and Engro Polymer Chemicals, you can compare the effects of market volatilities on Pak Gulf 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 Pak Gulf with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Gulf and Engro Polymer.
Diversification Opportunities for Pak Gulf and Engro Polymer
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pak and Engro is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pak Gulf Leasing 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 Pak Gulf 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 Pak Gulf Leasing 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 Pak Gulf i.e., Pak Gulf and Engro Polymer go up and down completely randomly.
Pair Corralation between Pak Gulf and Engro Polymer
Assuming the 90 days trading horizon Pak Gulf Leasing is expected to generate 3.0 times more return on investment than Engro Polymer. However, Pak Gulf is 3.0 times more volatile than Engro Polymer Chemicals. It trades about 0.09 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 368.00 in Pak Gulf Leasing on September 2, 2024 and sell it today you would earn a total of 735.00 from holding Pak Gulf Leasing or generate 199.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.37% |
| Values | Daily Returns |
Pak Gulf Leasing vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Pak Gulf Leasing |
| Engro Polymer Chemicals |
Pak Gulf and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Gulf and Engro Polymer
The main advantage of trading using opposite Pak Gulf and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Gulf 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.| Pak Gulf vs. Masood Textile Mills | Pak Gulf vs. Fauji Foods | Pak Gulf vs. KSB Pumps | Pak Gulf vs. Mari Petroleum |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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