Correlation Between Askari General and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Askari General and Dost Steels 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 Dost Steels 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 Dost Steels, you can compare the effects of market volatilities on Askari General and Dost Steels 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 Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Dost Steels.
Diversification Opportunities for Askari General and Dost Steels
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Askari and Dost is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels 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 Dost Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dost Steels has no effect on the direction of Askari General i.e., Askari General and Dost Steels go up and down completely randomly.
Pair Corralation between Askari General and Dost Steels
Assuming the 90 days trading horizon Askari General Insurance is expected to generate 0.96 times more return on investment than Dost Steels. However, Askari General Insurance is 1.04 times less risky than Dost Steels. It trades about 0.1 of its potential returns per unit of risk. Dost Steels is currently generating about 0.04 per unit of risk. If you would invest 1,041 in Askari General Insurance on September 12, 2024 and sell it today you would earn a total of 1,637 from holding Askari General Insurance or generate 157.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.82% |
| Values | Daily Returns |
Askari General Insurance vs. Dost Steels
Performance |
| Timeline |
| Askari General Insurance |
| Dost Steels |
Askari General and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and Dost Steels
The main advantage of trading using opposite Askari General and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Dost Steels 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 Dost Steels will offset losses from the drop in Dost Steels' long position.| Askari General vs. Masood Textile Mills | Askari General vs. Fauji Foods | Askari General vs. KSB Pumps | Askari General vs. Mari Petroleum |
| Dost Steels vs. AKD Hospitality | Dost Steels vs. TPL Insurance | Dost Steels vs. Matco Foods | Dost Steels vs. Pakistan Tobacco |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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