Correlation Between Crescent Star and Beco Steel
Can any of the company-specific risk be diversified away by investing in both Crescent Star and Beco 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 Star and Beco Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent Star Insurance and Beco Steel, you can compare the effects of market volatilities on Crescent Star and Beco 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 Star with a short position of Beco Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Beco Steel.
Diversification Opportunities for Crescent Star and Beco Steel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Crescent and Beco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Beco Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beco Steel and Crescent Star 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 Star Insurance are associated (or correlated) with Beco Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beco Steel has no effect on the direction of Crescent Star i.e., Crescent Star and Beco Steel go up and down completely randomly.
Pair Corralation between Crescent Star and Beco Steel
Assuming the 90 days trading horizon Crescent Star Insurance is expected to generate 0.75 times more return on investment than Beco Steel. However, Crescent Star Insurance is 1.34 times less risky than Beco Steel. It trades about 0.17 of its potential returns per unit of risk. Beco Steel is currently generating about -0.08 per unit of risk. If you would invest 275.00 in Crescent Star Insurance on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Crescent Star Insurance or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Star Insurance vs. Beco Steel
Performance |
| Timeline |
| Crescent Star Insurance |
| Beco Steel |
Crescent Star and Beco Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and Beco Steel
The main advantage of trading using opposite Crescent Star and Beco Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, Beco 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 Beco Steel will offset losses from the drop in Beco Steel's long position.| Crescent Star vs. Habib Bank | Crescent Star vs. National Bank of | Crescent Star vs. United Bank | Crescent Star vs. MCB Bank |
| Beco Steel vs. Mughal Iron Steel | Beco Steel vs. East West Insurance | Beco Steel vs. Honda Atlas Cars | Beco Steel vs. Sindh Modaraba Management |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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