Correlation Between Askari General and Dost Steels

Can any of the company-specific risk be diversified away by investing in both Askari General 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 Askari General and Dost 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 Dost Steels, you can compare the effects of market volatilities on Askari General 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 Askari General with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Dost Steels.

Diversification Opportunities for Askari General and Dost Steels

0.19

Correlation Coefficient

Askari General  Dost Steels

Average diversification

The 3 months correlation between Askari and Dost is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost 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 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 Askari General i.e., Askari General and Dost Steels go up and down completely randomly.

Pair Corralation between Askari General and Dost Steels

Assuming the 90 days trading horizon Askari General Insurance is expected to generate 0.73 times more return on investment than Dost Steels. However, Askari General Insurance is 1.38 times less risky than Dost Steels. It trades about 0.28 of its potential returns per unit of risk. Dost Steels is currently generating about 0.14 per unit of risk. If you would invest  2,769  in Askari General Insurance on October 25, 2024 and sell it today you would earn a total of  346.00  from holding Askari General Insurance or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Askari General Insurance  vs.  Dost Steels

Askari General Insurance

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Askari General Insurance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Askari General sustained solid returns over the last few months and may actually be approaching a breakup point.

Dost Steels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dost Steels has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Dost Steels is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Askari General and Dost Steels

The main advantage of trading using opposite Askari General and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General 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.

The idea behind Askari General Insurance and Dost 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.