Correlation Between Crescent Steel and Soneri Bank
Can any of the company-specific risk be diversified away by investing in both Crescent Steel and Soneri Bank 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 Soneri Bank 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 Soneri Bank, you can compare the effects of market volatilities on Crescent Steel and Soneri Bank 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 Soneri Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Steel and Soneri Bank.
Diversification Opportunities for Crescent Steel and Soneri Bank
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Crescent and Soneri is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Soneri Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soneri Bank 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 Soneri Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soneri Bank has no effect on the direction of Crescent Steel i.e., Crescent Steel and Soneri Bank go up and down completely randomly.
Pair Corralation between Crescent Steel and Soneri Bank
Assuming the 90 days trading horizon Crescent Steel Allied is expected to generate 1.91 times more return on investment than Soneri Bank. However, Crescent Steel is 1.91 times more volatile than Soneri Bank. It trades about 0.11 of its potential returns per unit of risk. Soneri Bank is currently generating about 0.16 per unit of risk. If you would invest 3,721 in Crescent Steel Allied on September 14, 2024 and sell it today you would earn a total of 6,424 from holding Crescent Steel Allied or generate 172.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Steel Allied vs. Soneri Bank
Performance |
| Timeline |
| Crescent Steel Allied |
| Soneri Bank |
Crescent Steel and Soneri Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Steel and Soneri Bank
The main advantage of trading using opposite Crescent Steel and Soneri Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel position performs unexpectedly, Soneri Bank 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 Soneri Bank will offset losses from the drop in Soneri Bank's long position.| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel vs. Mari Petroleum |
| Soneri Bank vs. Crescent Steel Allied | Soneri Bank vs. Dost Steels | Soneri Bank vs. Pakistan Aluminium Beverage | Soneri Bank vs. Matco 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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