Correlation Between Matco Foods and Dost Steels

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

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

Diversification Opportunities for Matco Foods and Dost Steels

-0.11

Correlation Coefficient

Matco Foods  Dost Steels

Good diversification

The 3 months correlation between Matco and Dost is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Matco Foods 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 Matco Foods 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 Matco Foods i.e., Matco Foods and Dost Steels go up and down completely randomly.

Pair Corralation between Matco Foods and Dost Steels

Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Dost Steels. In addition to that, Matco Foods is 1.37 times more volatile than Dost Steels. It trades about 0.0 of its total potential returns per unit of risk. Dost Steels is currently generating about 0.06 per unit of volatility. 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

Matco Foods  vs.  Dost Steels

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.

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.

Pair Trading with Matco Foods and Dost Steels

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.