Correlation Between Sindh Modaraba and Dost Steels
Can any of the company-specific risk be diversified away by investing in both Sindh Modaraba 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 Sindh Modaraba and Dost Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sindh Modaraba Management and Dost Steels, you can compare the effects of market volatilities on Sindh Modaraba 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 Sindh Modaraba with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sindh Modaraba and Dost Steels.
Diversification Opportunities for Sindh Modaraba and Dost Steels
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sindh and Dost is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sindh Modaraba Management and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Sindh Modaraba 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 Sindh Modaraba Management 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 Sindh Modaraba i.e., Sindh Modaraba and Dost Steels go up and down completely randomly.
Pair Corralation between Sindh Modaraba and Dost Steels
Assuming the 90 days trading horizon Sindh Modaraba Management is expected to generate 0.99 times more return on investment than Dost Steels. However, Sindh Modaraba Management is 1.01 times less risky than Dost Steels. It trades about 0.14 of its potential returns per unit of risk. Dost Steels is currently generating about 0.05 per unit of risk. If you would invest 949.00 in Sindh Modaraba Management on September 2, 2024 and sell it today you would earn a total of 70.00 from holding Sindh Modaraba Management or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sindh Modaraba Management vs. Dost Steels
Performance |
| Timeline |
| Sindh Modaraba Management |
| Dost Steels |
Sindh Modaraba and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sindh Modaraba and Dost Steels
The main advantage of trading using opposite Sindh Modaraba and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sindh Modaraba 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.| Sindh Modaraba vs. Masood Textile Mills | Sindh Modaraba vs. Fauji Foods | Sindh Modaraba vs. KSB Pumps | Sindh Modaraba vs. Mari Petroleum |
| Dost Steels vs. Pakistan Telecommunication | Dost Steels vs. Askari Bank | Dost Steels vs. Adamjee Insurance | Dost Steels vs. Soneri Bank |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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