Correlation Between Sitara Chemical and Engro Polymer
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical 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 Sitara Chemical and Engro Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitara Chemical Industries and Engro Polymer Chemicals, you can compare the effects of market volatilities on Sitara Chemical 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 Sitara Chemical with a short position of Engro Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and Engro Polymer.
Diversification Opportunities for Sitara Chemical and Engro Polymer
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sitara and Engro is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical 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 Sitara Chemical 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 Sitara Chemical 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 Sitara Chemical i.e., Sitara Chemical and Engro Polymer go up and down completely randomly.
Pair Corralation between Sitara Chemical and Engro Polymer
Assuming the 90 days trading horizon Sitara Chemical Industries is expected to generate 2.63 times more return on investment than Engro Polymer. However, Sitara Chemical is 2.63 times more volatile than Engro Polymer Chemicals. It trades about -0.02 of its potential returns per unit of risk. Engro Polymer Chemicals is currently generating about -0.43 per unit of risk. If you would invest 32,000 in Sitara Chemical Industries on November 4, 2024 and sell it today you would lose (489.00) from holding Sitara Chemical Industries or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sitara Chemical Industries vs. Engro Polymer Chemicals
Performance |
| Timeline |
| Sitara Chemical Indu |
| Engro Polymer Chemicals |
Sitara Chemical and Engro Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and Engro Polymer
The main advantage of trading using opposite Sitara Chemical and Engro Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical 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.| Sitara Chemical vs. Pakistan Tobacco | Sitara Chemical vs. Data Agro | Sitara Chemical vs. Century Insurance | Sitara Chemical vs. Oil and Gas |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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