Correlation Between Premier Insurance and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Premier Insurance 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 Premier Insurance and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Engro Polymer Chemicals, you can compare the effects of market volatilities on Premier Insurance 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 Premier Insurance with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Engro Polymer.
Diversification Opportunities for Premier Insurance and Engro Polymer
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Premier and Engro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance 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 Premier Insurance 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 Premier Insurance 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 Premier Insurance i.e., Premier Insurance and Engro Polymer go up and down completely randomly.
Pair Corralation between Premier Insurance and Engro Polymer
Assuming the 90 days trading horizon Premier Insurance is expected to generate 2.53 times more return on investment than Engro Polymer. However, Premier Insurance is 2.53 times more volatile than Engro Polymer Chemicals. It trades about 0.03 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about -0.37 per unit of risk. If you would invest 545.00 in Premier Insurance on November 5, 2024 and sell it today you would earn a total of 4.00 from holding Premier Insurance or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Insurance vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Premier Insurance |
| Engro Polymer Chemicals |
Premier Insurance and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Engro Polymer
The main advantage of trading using opposite Premier Insurance and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance 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.| Premier Insurance vs. Masood Textile Mills | Premier Insurance vs. Fauji Foods | Premier Insurance vs. KSB Pumps | Premier Insurance vs. Mari Petroleum |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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