Correlation Between Silkbank and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Silkbank 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 Silkbank and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silkbank and Engro Polymer Chemicals, you can compare the effects of market volatilities on Silkbank 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 Silkbank with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkbank and Engro Polymer.
Diversification Opportunities for Silkbank and Engro Polymer
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silkbank and Engro is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Silkbank 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 Silkbank 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 Silkbank 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 Silkbank i.e., Silkbank and Engro Polymer go up and down completely randomly.
Pair Corralation between Silkbank and Engro Polymer
Assuming the 90 days trading horizon Silkbank is expected to generate 0.84 times more return on investment than Engro Polymer. However, Silkbank is 1.19 times less risky than Engro Polymer. It trades about 0.15 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about 0.04 per unit of risk. If you would invest 111.00 in Silkbank on December 26, 2024 and sell it today you would earn a total of 4.00 from holding Silkbank or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.26% |
| Values | Daily Returns |
Silkbank vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Silkbank |
| Engro Polymer Chemicals |
Silkbank and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silkbank and Engro Polymer
The main advantage of trading using opposite Silkbank and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silkbank 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.| Silkbank vs. Unity Foods | Silkbank vs. Matco Foods | Silkbank vs. Jubilee Life Insurance | Silkbank vs. AKD Hospitality |
| Engro Polymer vs. IGI Life Insurance | Engro Polymer vs. Pakistan Aluminium Beverage | Engro Polymer vs. Habib Insurance | Engro Polymer vs. Jubilee Life Insurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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