Correlation Between Crescent Steel and Big Bird
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Big Bird 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 Crescent Steel and Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent Steel Allied and Big Bird Foods, you can compare the effects of market volatilities on Crescent Steel and Big Bird 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 Crescent Steel with a short position of Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Big Bird.
Diversification Opportunities for Crescent Steel and Big Bird
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crescent and Big is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods and Crescent Steel 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 Crescent Steel Allied are associated (or correlated) with Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Crescent Steel i.e., Crescent Steel and Big Bird go up and down completely randomly.
Pair Corralation between Crescent Steel and Big Bird
Assuming the 90 days trading horizon Crescent Steel Allied is expected to generate 1.07 times more return on investment than Big Bird. However, Crescent Steel is 1.07 times more volatile than Big Bird Foods. It trades about -0.09 of its potential returns per unit of risk. Big Bird Foods is currently generating about -0.2 per unit of risk. If you would invest 11,202 in Crescent Steel Allied on September 1, 2024 and sell it today you would lose (938.00) from holding Crescent Steel Allied or give up 8.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. Big Bird Foods
Performance |
| Timeline |
| Crescent Steel Allied |
| Big Bird Foods |
Crescent Steel and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Big Bird
The main advantage of trading using opposite Crescent Steel and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel vs. Mari Petroleum |
| Big Bird vs. Wah Nobel Chemicals | Big Bird vs. Mughal Iron Steel | Big Bird vs. Beco Steel | Big Bird vs. Nimir Industrial Chemical |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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