Correlation Between Thatta Cement and Askari General

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

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

Diversification Opportunities for Thatta Cement and Askari General

-0.07

Correlation Coefficient

Thatta Cement  Askari General

Good diversification

The 3 months correlation between Thatta and Askari is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Thatta Cement 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 Thatta Cement are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Thatta Cement i.e., Thatta Cement and Askari General go up and down completely randomly.

Pair Corralation between Thatta Cement and Askari General

Assuming the 90 days trading horizon Thatta Cement is expected to under-perform the Askari General. But the stock apears to be less risky and, when comparing its historical volatility, Thatta Cement is 1.13 times less risky than Askari General. The stock trades about -0.36 of its potential returns per unit of risk. The Askari General Insurance is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,143  in Askari General Insurance on December 4, 2024 and sell it today you would lose (89.00) from holding Askari General Insurance or give up 2.83% of portfolio value over 90 days.

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

Thatta Cement  vs.  Askari General Insurance

Thatta Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thatta Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Thatta Cement is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Askari General Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Askari General Insurance are ranked lower than 10 (%) 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.

Pair Trading with Thatta Cement and Askari General

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

The idea behind Thatta Cement and Askari General Insurance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.