Correlation Between Dost Steels and Atlas Insurance
Can any of the company-specific risk be diversified away by investing in both Dost Steels and Atlas Insurance 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 Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dost Steels and Atlas Insurance, you can compare the effects of market volatilities on Dost Steels and Atlas Insurance 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 Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dost Steels and Atlas Insurance.
Diversification Opportunities for Dost Steels and Atlas Insurance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dost and Atlas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Insurance 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 Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of Dost Steels i.e., Dost Steels and Atlas Insurance go up and down completely randomly.
Pair Corralation between Dost Steels and Atlas Insurance
Assuming the 90 days trading horizon Dost Steels is expected to generate 2.99 times less return on investment than Atlas Insurance. In addition to that, Dost Steels is 1.49 times more volatile than Atlas Insurance. It trades about 0.03 of its total potential returns per unit of risk. Atlas Insurance is currently generating about 0.13 per unit of volatility. If you would invest 2,775 in Atlas Insurance on August 31, 2024 and sell it today you would earn a total of 2,825 from holding Atlas Insurance or generate 101.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.46% |
| Values | Daily Returns |
Dost Steels vs. Atlas Insurance
Performance |
| Timeline |
| Dost Steels |
| Atlas Insurance |
Dost Steels and Atlas Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dost Steels and Atlas Insurance
The main advantage of trading using opposite Dost Steels and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dost Steels position performs unexpectedly, Atlas Insurance 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.| Dost Steels vs. Masood Textile Mills | Dost Steels vs. Fauji Foods | Dost Steels vs. KSB Pumps | Dost Steels vs. Mari Petroleum |
| Atlas Insurance vs. National Foods | Atlas Insurance vs. Ghani Chemical Industries | Atlas Insurance vs. Aisha Steel Mills | Atlas Insurance vs. Lotte Chemical Pakistan |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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