Correlation Between Crescent Steel and Sardar Chemical
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Sardar Chemical 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 Sardar Chemical 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 Sardar Chemical Industries, you can compare the effects of market volatilities on Crescent Steel and Sardar Chemical 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 Sardar Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Sardar Chemical.
Diversification Opportunities for Crescent Steel and Sardar Chemical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crescent and Sardar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Sardar Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sardar Chemical Indu 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 Sardar Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sardar Chemical Indu has no effect on the direction of Crescent Steel i.e., Crescent Steel and Sardar Chemical go up and down completely randomly.
Pair Corralation between Crescent Steel and Sardar Chemical
Assuming the 90 days trading horizon Crescent Steel Allied is expected to generate 0.87 times more return on investment than Sardar Chemical. However, Crescent Steel Allied is 1.15 times less risky than Sardar Chemical. It trades about -0.02 of its potential returns per unit of risk. Sardar Chemical Industries is currently generating about -0.09 per unit of risk. If you would invest 11,527 in Crescent Steel Allied on November 6, 2024 and sell it today you would lose (343.00) from holding Crescent Steel Allied or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Crescent Steel Allied vs. Sardar Chemical Industries
Performance |
| Timeline |
| Crescent Steel Allied |
| Sardar Chemical Indu |
Crescent Steel and Sardar Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Sardar Chemical
The main advantage of trading using opposite Crescent Steel and Sardar Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Sardar Chemical 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 Sardar Chemical will offset losses from the drop in Sardar Chemical's long position.| Crescent Steel vs. WorldCall Telecom | Crescent Steel vs. Crescent Star Insurance | Crescent Steel vs. Pakistan Reinsurance | Crescent Steel vs. Hi Tech Lubricants |
| Sardar Chemical vs. Orient Rental Modaraba | Sardar Chemical vs. 786 Investment Limited | Sardar Chemical vs. Oil and Gas | Sardar Chemical vs. Amreli Steels |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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