Correlation Between Shifa International and EFU General
Can any of the company-specific risk be diversified away by investing in both Shifa International and EFU General 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 Shifa International and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shifa International Hospitals and EFU General Insurance, you can compare the effects of market volatilities on Shifa International and EFU General 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 Shifa International with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and EFU General.
Diversification Opportunities for Shifa International and EFU General
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shifa and EFU is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Shifa International 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 Shifa International Hospitals are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Shifa International i.e., Shifa International and EFU General go up and down completely randomly.
Pair Corralation between Shifa International and EFU General
Assuming the 90 days trading horizon Shifa International Hospitals is expected to generate 1.25 times more return on investment than EFU General. However, Shifa International is 1.25 times more volatile than EFU General Insurance. It trades about 0.1 of its potential returns per unit of risk. EFU General Insurance is currently generating about 0.07 per unit of risk. If you would invest 37,316 in Shifa International Hospitals on October 21, 2024 and sell it today you would earn a total of 2,273 from holding Shifa International Hospitals or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shifa International Hospitals vs. EFU General Insurance
Performance |
| Timeline |
| Shifa International |
| EFU General Insurance |
Shifa International and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and EFU General
The main advantage of trading using opposite Shifa International and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| Shifa International vs. Wah Nobel Chemicals | Shifa International vs. Pakistan Telecommunication | Shifa International vs. Amreli Steels | Shifa International vs. Ittehad Chemicals |
| EFU General vs. Roshan Packages | EFU General vs. National Foods | EFU General vs. Data Agro | EFU General vs. Fateh Sports Wear |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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