Correlation Between Tariq CorpPref and EFU General

Can any of the company-specific risk be diversified away by investing in both Tariq CorpPref 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 Tariq CorpPref and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tariq CorpPref and EFU General Insurance, you can compare the effects of market volatilities on Tariq CorpPref 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 Tariq CorpPref with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tariq CorpPref and EFU General.

Diversification Opportunities for Tariq CorpPref and EFU General

-0.83

Correlation Coefficient

Tariq CorpPref  EFU General

Pay attention - limited upside

The 3 months correlation between Tariq and EFU is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tariq CorpPref 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 Tariq CorpPref 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 Tariq CorpPref 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 Tariq CorpPref i.e., Tariq CorpPref and EFU General go up and down completely randomly.

Pair Corralation between Tariq CorpPref and EFU General

Assuming the 90 days trading horizon Tariq CorpPref is expected to generate 2.55 times more return on investment than EFU General. However, Tariq CorpPref is 2.55 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  355.00  in Tariq CorpPref on September 28, 2024 and sell it today you would earn a total of  345.00  from holding Tariq CorpPref or generate 97.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	42.94%
Values	Daily Returns

Tariq CorpPref  vs.  EFU General Insurance

Tariq CorpPref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tariq CorpPref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

EFU General Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EFU General Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EFU General sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tariq CorpPref and EFU General

The main advantage of trading using opposite Tariq CorpPref and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tariq CorpPref 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.

The idea behind Tariq CorpPref and EFU General Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.