Correlation Between Nimir Industrial and Dost Steels

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

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

Diversification Opportunities for Nimir Industrial and Dost Steels

0.34

Correlation Coefficient

Nimir Industrial  Dost Steels

Weak diversification

The 3 months correlation between Nimir and Dost is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and Nimir Industrial 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 Nimir Industrial Chemical 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 Nimir Industrial i.e., Nimir Industrial and Dost Steels go up and down completely randomly.

Pair Corralation between Nimir Industrial and Dost Steels

Assuming the 90 days trading horizon Nimir Industrial is expected to generate 3.32 times less return on investment than Dost Steels. In addition to that, Nimir Industrial is 1.0 times more volatile than Dost Steels. It trades about 0.02 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 22, 2024 and sell it today you would earn a total of  46.00  from holding Dost Steels or generate 7.32% return on investment over 90 days.

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

Nimir Industrial Chemical  vs.  Dost Steels

Nimir Industrial Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nimir Industrial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 Nimir Industrial and Dost Steels

The main advantage of trading using opposite Nimir Industrial and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial 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 Nimir Industrial Chemical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..