Correlation Between Crescent Steel and Metropolitan Steel
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Metropolitan Steel 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 Metropolitan Steel 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 Metropolitan Steel Corp, you can compare the effects of market volatilities on Crescent Steel and Metropolitan Steel 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 Metropolitan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Metropolitan Steel.
Diversification Opportunities for Crescent Steel and Metropolitan Steel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crescent and Metropolitan is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Metropolitan Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Steel Corp 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 Metropolitan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Steel Corp has no effect on the direction of Crescent Steel i.e., Crescent Steel and Metropolitan Steel go up and down completely randomly.
Pair Corralation between Crescent Steel and Metropolitan Steel
Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the Metropolitan Steel. In addition to that, Crescent Steel is 1.3 times more volatile than Metropolitan Steel Corp. It trades about -0.09 of its total potential returns per unit of risk. Metropolitan Steel Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,060 in Metropolitan Steel Corp on September 1, 2024 and sell it today you would earn a total of 39.00 from holding Metropolitan Steel Corp or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. Metropolitan Steel Corp
Performance |
| Timeline |
| Crescent Steel Allied |
| Metropolitan Steel Corp |
Crescent Steel and Metropolitan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Metropolitan Steel
The main advantage of trading using opposite Crescent Steel and Metropolitan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Metropolitan Steel 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 Metropolitan Steel will offset losses from the drop in Metropolitan Steel's long position.| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel vs. Mari Petroleum |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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