Correlation Between Dost Steels and Askari Bank
Can any of the company-specific risk be diversified away by investing in both Dost Steels and Askari Bank 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 Dost Steels and Askari Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dost Steels and Askari Bank, you can compare the effects of market volatilities on Dost Steels and Askari Bank 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 Dost Steels with a short position of Askari Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dost Steels and Askari Bank.
Diversification Opportunities for Dost Steels and Askari Bank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dost and Askari is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and Askari Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Bank and Dost Steels 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 Dost Steels are associated (or correlated) with Askari Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Bank has no effect on the direction of Dost Steels i.e., Dost Steels and Askari Bank go up and down completely randomly.
Pair Corralation between Dost Steels and Askari Bank
Assuming the 90 days trading horizon Dost Steels is expected to generate 1.02 times less return on investment than Askari Bank. In addition to that, Dost Steels is 1.44 times more volatile than Askari Bank. It trades about 0.11 of its total potential returns per unit of risk. Askari Bank is currently generating about 0.16 per unit of volatility. If you would invest 2,964 in Askari Bank on August 28, 2024 and sell it today you would earn a total of 181.00 from holding Askari Bank or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dost Steels vs. Askari Bank
Performance |
| Timeline |
| Dost Steels |
| Askari Bank |
Dost Steels and Askari Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dost Steels and Askari Bank
The main advantage of trading using opposite Dost Steels and Askari Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dost Steels position performs unexpectedly, Askari Bank 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 Askari Bank will offset losses from the drop in Askari Bank's long position.| Dost Steels vs. Oil and Gas | Dost Steels vs. Pakistan State Oil | Dost Steels vs. Pakistan Petroleum | Dost Steels vs. Engro |
| Askari Bank vs. Hi Tech Lubricants | Askari Bank vs. Ittehad Chemicals | Askari Bank vs. Pakistan Aluminium Beverage | Askari Bank vs. 786 Investment Limited |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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