Correlation Between Gatron Industries and Askari General
Can any of the company-specific risk be diversified away by investing in both Gatron Industries and Askari General 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 Gatron Industries and Askari General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatron Industries and Askari General Insurance, you can compare the effects of market volatilities on Gatron Industries and Askari General 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 Gatron Industries with a short position of Askari General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatron Industries and Askari General.
Diversification Opportunities for Gatron Industries and Askari General
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gatron and Askari is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Gatron Industries 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 Gatron Industries are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Gatron Industries i.e., Gatron Industries and Askari General go up and down completely randomly.
Pair Corralation between Gatron Industries and Askari General
Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Askari General. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 1.01 times less risky than Askari General. The stock trades about -0.06 of its potential returns per unit of risk. The Askari General Insurance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,320 in Askari General Insurance on September 14, 2024 and sell it today you would earn a total of 1,500 from holding Askari General Insurance or generate 113.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.34% |
| Values | Daily Returns |
Gatron Industries vs. Askari General Insurance
Performance |
| Timeline |
| Gatron Industries |
| Askari General Insurance |
Gatron Industries and Askari General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatron Industries and Askari General
The main advantage of trading using opposite Gatron Industries and Askari General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatron Industries position performs unexpectedly, Askari General 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 General will offset losses from the drop in Askari General's long position.| Gatron Industries vs. Adamjee Insurance | Gatron Industries vs. The Organic Meat | Gatron Industries vs. Askari General Insurance | Gatron Industries vs. Reliance Insurance Co |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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