Correlation Between Crescent Steel and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Nimir Industrial 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 Nimir Industrial 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 Nimir Industrial Chemical, you can compare the effects of market volatilities on Crescent Steel and Nimir Industrial 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 Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Nimir Industrial.
Diversification Opportunities for Crescent Steel and Nimir Industrial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crescent and Nimir is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical 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 Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of Crescent Steel i.e., Crescent Steel and Nimir Industrial go up and down completely randomly.
Pair Corralation between Crescent Steel and Nimir Industrial
Assuming the 90 days trading horizon Crescent Steel Allied is expected to generate 1.16 times more return on investment than Nimir Industrial. However, Crescent Steel is 1.16 times more volatile than Nimir Industrial Chemical. It trades about 0.08 of its potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.06 per unit of risk. If you would invest 3,315 in Crescent Steel Allied on September 2, 2024 and sell it today you would earn a total of 6,949 from holding Crescent Steel Allied or generate 209.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.73% |
| Values | Daily Returns |
Crescent Steel Allied vs. Nimir Industrial Chemical
Performance |
| Timeline |
| Crescent Steel Allied |
| Nimir Industrial Chemical |
Crescent Steel and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Nimir Industrial
The main advantage of trading using opposite Crescent Steel and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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