Correlation Between Dost Steels and Matco Foods

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

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

Diversification Opportunities for Dost Steels and Matco Foods

-0.11

Correlation Coefficient

Dost Steels  Matco Foods

Good diversification

The 3 months correlation between Dost and Matco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dost Steels and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods 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 Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Dost Steels i.e., Dost Steels and Matco Foods go up and down completely randomly.

Pair Corralation between Dost Steels and Matco Foods

Assuming the 90 days trading horizon Dost Steels is expected to generate 0.73 times more return on investment than Matco Foods. However, Dost Steels is 1.37 times less risky than Matco Foods. It trades about 0.06 of its potential returns per unit of risk. Matco Foods is currently generating about 0.0 per unit of risk. If you would invest  628.00  in Dost Steels on December 21, 2024 and sell it today you would earn a total of  52.00  from holding Dost Steels or generate 8.28% return on investment over 90 days.

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

Dost Steels  vs.  Matco Foods

Dost Steels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dost Steels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Dost Steels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Matco Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dost Steels and Matco Foods

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

The idea behind Dost Steels and Matco Foods 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.