Correlation Between Crescent Steel and Hub Power
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Hub Power 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 Hub Power 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 Hub Power, you can compare the effects of market volatilities on Crescent Steel and Hub Power 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 Hub Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Hub Power.
Diversification Opportunities for Crescent Steel and Hub Power
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Crescent and Hub is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Hub Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Power 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 Hub Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Power has no effect on the direction of Crescent Steel i.e., Crescent Steel and Hub Power go up and down completely randomly.
Pair Corralation between Crescent Steel and Hub Power
Assuming the 90 days trading horizon Crescent Steel Allied is expected to generate 1.95 times more return on investment than Hub Power. However, Crescent Steel is 1.95 times more volatile than Hub Power. It trades about 0.12 of its potential returns per unit of risk. Hub Power is currently generating about 0.1 per unit of risk. If you would invest 2,315 in Crescent Steel Allied on September 4, 2024 and sell it today you would earn a total of 7,934 from holding Crescent Steel Allied or generate 342.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. Hub Power
Performance |
| Timeline |
| Crescent Steel Allied |
| Hub Power |
Crescent Steel and Hub Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Hub Power
The main advantage of trading using opposite Crescent Steel and Hub Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Hub Power 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 Hub Power will offset losses from the drop in Hub Power's long position.| Crescent Steel vs. Pakistan Aluminium Beverage | Crescent Steel vs. ITTEFAQ Iron Industries | Crescent Steel vs. International Steels | Crescent Steel vs. Mughal Iron Steel |
| Hub Power vs. Pakistan Telecommunication | Hub Power vs. Orient Rental Modaraba | Hub Power vs. Air Link Communication | Hub Power vs. Pakistan Tobacco |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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