Correlation Between Dow Jones and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Agha Steel 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 Dow Jones and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Agha Steel Industries, you can compare the effects of market volatilities on Dow Jones and Agha Steel 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 Dow Jones with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Agha Steel.
Diversification Opportunities for Dow Jones and Agha Steel
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Agha is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Dow Jones i.e., Dow Jones and Agha Steel go up and down completely randomly.
Pair Corralation between Dow Jones and Agha Steel
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.47 times more return on investment than Agha Steel. However, Dow Jones Industrial is 2.13 times less risky than Agha Steel. It trades about -0.19 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.14 per unit of risk. If you would invest 4,471,358 in Dow Jones Industrial on November 28, 2024 and sell it today you would lose (109,242) from holding Dow Jones Industrial or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Agha Steel Industries
Performance |
| Timeline |
Dow Jones and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Agha Steel Industries
Pair trading matchups for Agha Steel
Pair Trading with Dow Jones and Agha Steel
The main advantage of trading using opposite Dow Jones and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Agha Steel vs. Dost Steels | Agha Steel vs. Pakistan Telecommunication | Agha Steel vs. Unilever Pakistan Foods | Agha Steel vs. Wah Nobel Chemicals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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