Correlation Between Packages and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Packages and Dost Steels 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 Packages and Dost Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packages and Dost Steels, you can compare the effects of market volatilities on Packages and Dost Steels 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 Packages with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packages and Dost Steels.
Diversification Opportunities for Packages and Dost Steels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Packages and Dost is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Packages and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Packages 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 Packages are associated (or correlated) with Dost Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dost Steels has no effect on the direction of Packages i.e., Packages and Dost Steels go up and down completely randomly.
Pair Corralation between Packages and Dost Steels
Assuming the 90 days trading horizon Packages is expected to under-perform the Dost Steels. But the stock apears to be less risky and, when comparing its historical volatility, Packages is 1.44 times less risky than Dost Steels. The stock trades about -0.28 of its potential returns per unit of risk. The Dost Steels is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 681.00 in Dost Steels on November 8, 2024 and sell it today you would earn a total of 15.00 from holding Dost Steels or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packages vs. Dost Steels
Performance |
| Timeline |
| Packages |
| Dost Steels |
Packages and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packages and Dost Steels
The main advantage of trading using opposite Packages and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packages position performs unexpectedly, Dost Steels 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 Dost Steels will offset losses from the drop in Dost Steels' long position.| Packages vs. Crescent Star Insurance | Packages vs. WorldCall Telecom | Packages vs. Air Link Communication | Packages vs. Pakistan Aluminium Beverage |
| Dost Steels vs. Hi Tech Lubricants | Dost Steels vs. Pakistan Telecommunication | Dost Steels vs. Bawany Air Products | Dost Steels vs. NetSol Technologies |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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