Correlation Between Crescent Steel and National Foods
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and National Foods 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 National Foods 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 National Foods, you can compare the effects of market volatilities on Crescent Steel and National Foods 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 National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and National Foods.
Diversification Opportunities for Crescent Steel and National Foods
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crescent and National is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National 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 National Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Foods has no effect on the direction of Crescent Steel i.e., Crescent Steel and National Foods go up and down completely randomly.
Pair Corralation between Crescent Steel and National Foods
Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the National Foods. In addition to that, Crescent Steel is 2.83 times more volatile than National Foods. It trades about -0.09 of its total potential returns per unit of risk. National Foods is currently generating about -0.02 per unit of volatility. If you would invest 16,699 in National Foods on August 28, 2024 and sell it today you would lose (141.00) from holding National Foods or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. National Foods
Performance |
| Timeline |
| Crescent Steel Allied |
| National Foods |
Crescent Steel and National Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and National Foods
The main advantage of trading using opposite Crescent Steel and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, National Foods 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 National Foods will offset losses from the drop in National Foods' long position.| Crescent Steel vs. Oil and Gas | Crescent Steel vs. Pakistan State Oil | Crescent Steel vs. Pakistan Petroleum | Crescent Steel vs. Engro |
| National Foods vs. Matco Foods | National Foods vs. Pakistan Aluminium Beverage | National Foods vs. Crescent Star Insurance | National Foods vs. Unity Foods |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |