Correlation Between Dost Steels and Pakistan Hotel
Can any of the company-specific risk be diversified away by investing in both Dost Steels and Pakistan Hotel 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 Pakistan Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dost Steels and Pakistan Hotel Developers, you can compare the effects of market volatilities on Dost Steels and Pakistan Hotel 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 Pakistan Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dost Steels and Pakistan Hotel.
Diversification Opportunities for Dost Steels and Pakistan Hotel
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dost and Pakistan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and Pakistan Hotel Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Hotel Developers 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 Pakistan Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Hotel Developers has no effect on the direction of Dost Steels i.e., Dost Steels and Pakistan Hotel go up and down completely randomly.
Pair Corralation between Dost Steels and Pakistan Hotel
Assuming the 90 days trading horizon Dost Steels is expected to under-perform the Pakistan Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Dost Steels is 1.81 times less risky than Pakistan Hotel. The stock trades about -0.06 of its potential returns per unit of risk. The Pakistan Hotel Developers is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 3,497 in Pakistan Hotel Developers on September 12, 2024 and sell it today you would earn a total of 2,824 from holding Pakistan Hotel Developers or generate 80.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dost Steels vs. Pakistan Hotel Developers
Performance |
| Timeline |
| Dost Steels |
| Pakistan Hotel Developers |
Dost Steels and Pakistan Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dost Steels and Pakistan Hotel
The main advantage of trading using opposite Dost Steels and Pakistan Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dost Steels position performs unexpectedly, Pakistan Hotel 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 Pakistan Hotel will offset losses from the drop in Pakistan Hotel's long position.| Dost Steels vs. AKD Hospitality | Dost Steels vs. TPL Insurance | Dost Steels vs. Matco Foods | Dost Steels vs. Pakistan Tobacco |
| Pakistan Hotel vs. Crescent Star Insurance | Pakistan Hotel vs. Air Link Communication | Pakistan Hotel vs. Grays Leasing | Pakistan Hotel vs. EFU General Insurance |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |