Correlation Between Dost Steels and Unity Foods
Can any of the company-specific risk be diversified away by investing in both Dost Steels and Unity Foods 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 Unity Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dost Steels and Unity Foods, you can compare the effects of market volatilities on Dost Steels and Unity Foods 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 Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dost Steels and Unity Foods.
Diversification Opportunities for Dost Steels and Unity Foods
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dost and Unity is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods 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 Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of Dost Steels i.e., Dost Steels and Unity Foods go up and down completely randomly.
Pair Corralation between Dost Steels and Unity Foods
Assuming the 90 days trading horizon Dost Steels is expected to generate 1.29 times more return on investment than Unity Foods. However, Dost Steels is 1.29 times more volatile than Unity Foods. It trades about 0.17 of its potential returns per unit of risk. Unity Foods is currently generating about 0.14 per unit of risk. If you would invest 628.00 in Dost Steels on August 24, 2024 and sell it today you would earn a total of 69.00 from holding Dost Steels or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dost Steels vs. Unity Foods
Performance |
| Timeline |
| Dost Steels |
| Unity Foods |
Dost Steels and Unity Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dost Steels and Unity Foods
The main advantage of trading using opposite Dost Steels and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dost Steels position performs unexpectedly, Unity Foods 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 Unity Foods will offset losses from the drop in Unity Foods' long position.| Dost Steels vs. Oil and Gas | Dost Steels vs. Pakistan State Oil | Dost Steels vs. Pakistan Petroleum | Dost Steels vs. Engro |
| Unity Foods vs. Masood Textile Mills | Unity Foods vs. Fauji Foods | Unity Foods vs. KSB Pumps | Unity Foods vs. Mari Petroleum |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |