Correlation Between Askari General and Amreli Steels

Can any of the company-specific risk be diversified away by investing in both Askari General and Amreli 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 Askari General and Amreli Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Askari General Insurance and Amreli Steels, you can compare the effects of market volatilities on Askari General and Amreli 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 Askari General with a short position of Amreli Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Amreli Steels.

Diversification Opportunities for Askari General and Amreli Steels

-0.54

Correlation Coefficient

Askari General  Amreli Steels

Excellent diversification

The 3 months correlation between Askari and Amreli is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels and Askari General 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 Askari General Insurance are associated (or correlated) with Amreli Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amreli Steels has no effect on the direction of Askari General i.e., Askari General and Amreli Steels go up and down completely randomly.

Pair Corralation between Askari General and Amreli Steels

Assuming the 90 days trading horizon Askari General Insurance is expected to generate 1.18 times more return on investment than Amreli Steels. However, Askari General is 1.18 times more volatile than Amreli Steels. It trades about 0.06 of its potential returns per unit of risk. Amreli Steels is currently generating about -0.18 per unit of risk. If you would invest  2,945  in Askari General Insurance on December 31, 2024 and sell it today you would earn a total of  226.00  from holding Askari General Insurance or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Askari General Insurance  vs.  Amreli Steels

Askari General Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Askari General Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Askari General may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Amreli Steels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amreli Steels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Askari General and Amreli Steels

The main advantage of trading using opposite Askari General and Amreli Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Amreli 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 Amreli Steels will offset losses from the drop in Amreli Steels' long position.

The idea behind Askari General Insurance and Amreli Steels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..