Correlation Between Quice Food and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Quice Food 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 Quice Food and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quice Food Industries and Engro Polymer Chemicals, you can compare the effects of market volatilities on Quice Food 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 Quice Food with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quice Food and Engro Polymer.
Diversification Opportunities for Quice Food and Engro Polymer
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quice and Engro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Quice Food Industries 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 Quice Food 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 Quice Food Industries 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 Quice Food i.e., Quice Food and Engro Polymer go up and down completely randomly.
Pair Corralation between Quice Food and Engro Polymer
Assuming the 90 days trading horizon Quice Food is expected to generate 1.32 times less return on investment than Engro Polymer. But when comparing it to its historical volatility, Quice Food Industries is 1.19 times less risky than Engro Polymer. It trades about 0.18 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,178 in Engro Polymer Chemicals on August 30, 2024 and sell it today you would earn a total of 424.00 from holding Engro Polymer Chemicals or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quice Food Industries vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Quice Food Industries |
| Engro Polymer Chemicals |
Quice Food and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quice Food and Engro Polymer
The main advantage of trading using opposite Quice Food and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quice Food 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.| Quice Food vs. Honda Atlas Cars | Quice Food vs. IBL HealthCare | Quice Food vs. AKD Hospitality | Quice Food vs. National Foods |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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