Correlation Between Crescent Steel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Crescent Steel and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Dow Jones.
Diversification Opportunities for Crescent Steel and Dow Jones
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crescent and Dow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Crescent Steel i.e., Crescent Steel and Dow Jones go up and down completely randomly.
Pair Corralation between Crescent Steel and Dow Jones
Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the Dow Jones. In addition to that, Crescent Steel is 4.52 times more volatile than Dow Jones Industrial. It trades about -0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 178,156 from holding Dow Jones Industrial or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. Dow Jones Industrial
Performance |
| Timeline |
Crescent Steel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Crescent Steel Allied
Pair trading matchups for Crescent Steel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Crescent Steel and Dow Jones
The main advantage of trading using opposite Crescent Steel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Crescent Steel vs. Oil and Gas | Crescent Steel vs. Pakistan State Oil | Crescent Steel vs. Pakistan Petroleum | Crescent Steel vs. Engro |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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