Correlation Between Dost Steels and First Al
Can any of the company-specific risk be diversified away by investing in both Dost Steels and First Al 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 First Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dost Steels and First Al Noor Modaraba, you can compare the effects of market volatilities on Dost Steels and First Al 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 First Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dost Steels and First Al.
Diversification Opportunities for Dost Steels and First Al
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dost and First is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and First Al Noor Modaraba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Al Noor 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 First Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Al Noor has no effect on the direction of Dost Steels i.e., Dost Steels and First Al go up and down completely randomly.
Pair Corralation between Dost Steels and First Al
Assuming the 90 days trading horizon Dost Steels is expected to under-perform the First Al. But the stock apears to be less risky and, when comparing its historical volatility, Dost Steels is 1.45 times less risky than First Al. The stock trades about -0.04 of its potential returns per unit of risk. The First Al Noor Modaraba is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 354.00 in First Al Noor Modaraba on September 13, 2024 and sell it today you would lose (5.00) from holding First Al Noor Modaraba or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dost Steels vs. First Al Noor Modaraba
Performance |
| Timeline |
| Dost Steels |
| First Al Noor |
Dost Steels and First Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dost Steels and First Al
The main advantage of trading using opposite Dost Steels and First Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dost Steels position performs unexpectedly, First Al 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 First Al will offset losses from the drop in First Al's long position.| Dost Steels vs. Masood Textile Mills | Dost Steels vs. Fauji Foods | Dost Steels vs. KSB Pumps | Dost Steels vs. Mari Petroleum |
| First Al vs. National Foods | First Al vs. AKD Hospitality | First Al vs. Habib Insurance | First Al vs. Unilever Pakistan Foods |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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