Correlation Between Askari Bank and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Askari Bank 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 Bank 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 Bank and Dost Steels, you can compare the effects of market volatilities on Askari Bank 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 Bank with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari Bank and Dost Steels.
Diversification Opportunities for Askari Bank and Dost Steels
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Askari and Dost is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Askari Bank 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 Bank 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 Bank i.e., Askari Bank and Dost Steels go up and down completely randomly.
Pair Corralation between Askari Bank and Dost Steels
Assuming the 90 days trading horizon Askari Bank is expected to generate 1.2 times less return on investment than Dost Steels. But when comparing it to its historical volatility, Askari Bank is 1.17 times less risky than Dost Steels. It trades about 0.13 of its potential returns per unit of risk. Dost Steels is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 609.00 in Dost Steels on October 25, 2024 and sell it today you would earn a total of 47.00 from holding Dost Steels or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari Bank vs. Dost Steels
Performance |
| Timeline |
| Askari Bank |
| Dost Steels |
Askari Bank and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari Bank and Dost Steels
The main advantage of trading using opposite Askari Bank and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank 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 Bank vs. Pakistan Reinsurance | Askari Bank vs. Crescent Star Insurance | Askari Bank vs. United Insurance | Askari Bank vs. Invest Capital Investment |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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