Correlation Between Askari General and Atlas Honda
Can any of the company-specific risk be diversified away by investing in both Askari General and Atlas Honda 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 Askari General and Atlas Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari General Insurance and Atlas Honda, you can compare the effects of market volatilities on Askari General and Atlas Honda 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 Askari General with a short position of Atlas Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Atlas Honda.
Diversification Opportunities for Askari General and Atlas Honda
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Askari and Atlas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Atlas Honda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Honda and Askari General 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 Askari General Insurance are associated (or correlated) with Atlas Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Honda has no effect on the direction of Askari General i.e., Askari General and Atlas Honda go up and down completely randomly.
Pair Corralation between Askari General and Atlas Honda
Assuming the 90 days trading horizon Askari General is expected to generate 1.76 times less return on investment than Atlas Honda. But when comparing it to its historical volatility, Askari General Insurance is 1.35 times less risky than Atlas Honda. It trades about 0.15 of its potential returns per unit of risk. Atlas Honda is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 78,711 in Atlas Honda on August 30, 2024 and sell it today you would earn a total of 7,154 from holding Atlas Honda or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari General Insurance vs. Atlas Honda
Performance |
| Timeline |
| Askari General Insurance |
| Atlas Honda |
Askari General and Atlas Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and Atlas Honda
The main advantage of trading using opposite Askari General and Atlas Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Atlas Honda 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 Atlas Honda will offset losses from the drop in Atlas Honda's long position.| Askari General vs. Masood Textile Mills | Askari General vs. Fauji Foods | Askari General vs. KSB Pumps | Askari General vs. Mari Petroleum |
| Atlas Honda vs. The Organic Meat | Atlas Honda vs. Oil and Gas | Atlas Honda vs. Ittehad Chemicals | Atlas Honda vs. Sitara Chemical Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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