Correlation Between Universal Insurance and Engro
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and Engro 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 Universal Insurance and Engro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance and Engro, you can compare the effects of market volatilities on Universal Insurance and Engro 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 Universal Insurance with a short position of Engro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and Engro.
Diversification Opportunities for Universal Insurance and Engro
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Universal and Engro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and Engro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engro and Universal 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 Universal Insurance are associated (or correlated) with Engro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engro has no effect on the direction of Universal Insurance i.e., Universal Insurance and Engro go up and down completely randomly.
Pair Corralation between Universal Insurance and Engro
Assuming the 90 days trading horizon Universal Insurance is expected to under-perform the Engro. In addition to that, Universal Insurance is 1.72 times more volatile than Engro. It trades about -0.09 of its total potential returns per unit of risk. Engro is currently generating about 0.56 per unit of volatility. If you would invest 42,572 in Engro on October 26, 2024 and sell it today you would earn a total of 5,966 from holding Engro or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 35.0% |
| Values | Daily Returns |
Universal Insurance vs. Engro
Performance |
| Timeline |
| Universal Insurance |
| Engro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Universal Insurance and Engro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and Engro
The main advantage of trading using opposite Universal Insurance and Engro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, Engro 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 will offset losses from the drop in Engro's long position.| Universal Insurance vs. Honda Atlas Cars | Universal Insurance vs. Shaheen Insurance | Universal Insurance vs. Bank of Punjab | Universal Insurance vs. Allied Bank |
| Engro vs. Askari General Insurance | Engro vs. Pakistan Reinsurance | Engro vs. Reliance Insurance Co | Engro vs. Universal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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