Correlation Between Bestway Cement and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Bestway Cement 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 Bestway Cement and Dost Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bestway Cement and Dost Steels, you can compare the effects of market volatilities on Bestway Cement 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 Bestway Cement with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bestway Cement and Dost Steels.
Diversification Opportunities for Bestway Cement and Dost Steels
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bestway and Dost is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bestway Cement and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Bestway Cement 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 Bestway Cement 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 Bestway Cement i.e., Bestway Cement and Dost Steels go up and down completely randomly.
Pair Corralation between Bestway Cement and Dost Steels
Assuming the 90 days trading horizon Bestway Cement is expected to generate 0.58 times more return on investment than Dost Steels. However, Bestway Cement is 1.72 times less risky than Dost Steels. It trades about 0.37 of its potential returns per unit of risk. Dost Steels is currently generating about 0.15 per unit of risk. If you would invest 23,387 in Bestway Cement on August 28, 2024 and sell it today you would earn a total of 6,541 from holding Bestway Cement or generate 27.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bestway Cement vs. Dost Steels
Performance |
| Timeline |
| Bestway Cement |
| Dost Steels |
Bestway Cement and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bestway Cement and Dost Steels
The main advantage of trading using opposite Bestway Cement and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bestway Cement 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.| Bestway Cement vs. Habib Bank | Bestway Cement vs. National Bank of | Bestway Cement vs. United Bank | Bestway Cement vs. MCB Bank |
| Dost Steels vs. Oil and Gas | Dost Steels vs. Pakistan State Oil | Dost Steels vs. Pakistan Petroleum | Dost Steels vs. Engro |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |