Correlation Between Crescent Steel and EFU General
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and EFU 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 Crescent Steel and EFU General 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 EFU General Insurance, you can compare the effects of market volatilities on Crescent Steel and EFU 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 Crescent Steel with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and EFU General.
Diversification Opportunities for Crescent Steel and EFU General
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Crescent and EFU is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance 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 EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Crescent Steel i.e., Crescent Steel and EFU General go up and down completely randomly.
Pair Corralation between Crescent Steel and EFU General
Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the EFU General. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Steel Allied is 1.03 times less risky than EFU General. The stock trades about -0.09 of its potential returns per unit of risk. The EFU General Insurance is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 8,872 in EFU General Insurance on September 1, 2024 and sell it today you would earn a total of 4,617 from holding EFU General Insurance or generate 52.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. EFU General Insurance
Performance |
| Timeline |
| Crescent Steel Allied |
| EFU General Insurance |
Crescent Steel and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and EFU General
The main advantage of trading using opposite Crescent Steel and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, EFU 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 EFU General will offset losses from the drop in EFU General's long position.| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel vs. Mari Petroleum |
| EFU General vs. Reliance Insurance Co | EFU General vs. Mughal Iron Steel | EFU General vs. United Insurance | EFU General vs. Crescent Steel Allied |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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