Correlation Between Dost Steels and AGP

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

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

Diversification Opportunities for Dost Steels and AGP

0.18

Correlation Coefficient

Dost Steels  AGP

Average diversification

The 3 months correlation between Dost and AGP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and AGP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGP and Dost Steels 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 Dost Steels are associated (or correlated) with AGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGP has no effect on the direction of Dost Steels i.e., Dost Steels and AGP go up and down completely randomly.

Pair Corralation between Dost Steels and AGP

Assuming the 90 days trading horizon Dost Steels is expected to generate 1.19 times less return on investment than AGP. In addition to that, Dost Steels is 1.19 times more volatile than AGP. It trades about 0.09 of its total potential returns per unit of risk. AGP is currently generating about 0.13 per unit of volatility. If you would invest  16,349  in AGP on December 20, 2024 and sell it today you would earn a total of  2,860  from holding AGP or generate 17.49% return on investment over 90 days.

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

Dost Steels  vs.  AGP

Dost Steels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dost Steels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Dost Steels reported solid returns over the last few months and may actually be approaching a breakup point.

AGP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AGP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dost Steels and AGP

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

The idea behind Dost Steels and AGP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.