Correlation Between Aisha Steel and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Aisha Steel 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 Aisha Steel and Dost Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aisha Steel Mills and Dost Steels, you can compare the effects of market volatilities on Aisha Steel 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 Aisha Steel with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Dost Steels.
Diversification Opportunities for Aisha Steel and Dost Steels
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aisha and Dost is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Aisha Steel 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 Aisha Steel Mills 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 Aisha Steel i.e., Aisha Steel and Dost Steels go up and down completely randomly.
Pair Corralation between Aisha Steel and Dost Steels
Assuming the 90 days trading horizon Aisha Steel Mills is expected to generate 1.05 times more return on investment than Dost Steels. However, Aisha Steel is 1.05 times more volatile than Dost Steels. It trades about 0.05 of its potential returns per unit of risk. Dost Steels is currently generating about 0.04 per unit of risk. If you would invest 558.00 in Aisha Steel Mills on August 28, 2024 and sell it today you would earn a total of 232.00 from holding Aisha Steel Mills or generate 41.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aisha Steel Mills vs. Dost Steels
Performance |
| Timeline |
| Aisha Steel Mills |
| Dost Steels |
Aisha Steel and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aisha Steel and Dost Steels
The main advantage of trading using opposite Aisha Steel and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel 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.| Aisha Steel vs. Honda Atlas Cars | Aisha Steel vs. Pakistan Hotel Developers | Aisha Steel vs. Security Investment Bank | Aisha Steel vs. 786 Investment Limited |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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