Correlation Between Askari General and National Foods
Can any of the company-specific risk be diversified away by investing in both Askari General and National Foods 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 National Foods 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 National Foods, you can compare the effects of market volatilities on Askari General and National Foods 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 National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and National Foods.
Diversification Opportunities for Askari General and National Foods
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Askari and National is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Foods 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 National Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Foods has no effect on the direction of Askari General i.e., Askari General and National Foods go up and down completely randomly.
Pair Corralation between Askari General and National Foods
Assuming the 90 days trading horizon Askari General Insurance is expected to generate 1.6 times more return on investment than National Foods. However, Askari General is 1.6 times more volatile than National Foods. It trades about 0.19 of its potential returns per unit of risk. National Foods is currently generating about -0.06 per unit of risk. If you would invest 1,898 in Askari General Insurance on August 28, 2024 and sell it today you would earn a total of 563.00 from holding Askari General Insurance or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Askari General Insurance vs. National Foods
Performance |
| Timeline |
| Askari General Insurance |
| National Foods |
Askari General and National Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and National Foods
The main advantage of trading using opposite Askari General and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, National Foods 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 National Foods will offset losses from the drop in National Foods' long position.| Askari General vs. Lotte Chemical Pakistan | Askari General vs. Unilever Pakistan Foods | Askari General vs. Orient Rental Modaraba | Askari General vs. Packages |
| National Foods vs. Matco Foods | National Foods vs. Pakistan Aluminium Beverage | National Foods vs. Crescent Star Insurance | National Foods vs. Unity Foods |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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