Correlation Between Crescent Star and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Crescent Star and Century Insurance 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 Century Insurance 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 Century Insurance, you can compare the effects of market volatilities on Crescent Star and Century Insurance 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 Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Century Insurance.
Diversification Opportunities for Crescent Star and Century Insurance
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crescent and Century is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance 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 Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Crescent Star i.e., Crescent Star and Century Insurance go up and down completely randomly.
Pair Corralation between Crescent Star and Century Insurance
Assuming the 90 days trading horizon Crescent Star is expected to generate 1.87 times less return on investment than Century Insurance. In addition to that, Crescent Star is 1.16 times more volatile than Century Insurance. It trades about 0.05 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.12 per unit of volatility. If you would invest 1,179 in Century Insurance on November 1, 2024 and sell it today you would earn a total of 2,720 from holding Century Insurance or generate 230.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.56% |
| Values | Daily Returns |
Crescent Star Insurance vs. Century Insurance
Performance |
| Timeline |
| Crescent Star Insurance |
| Century Insurance |
Crescent Star and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and Century Insurance
The main advantage of trading using opposite Crescent Star and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, Century Insurance 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Crescent Star vs. ORIX Leasing Pakistan | Crescent Star vs. Fateh Sports Wear | Crescent Star vs. Matco Foods | Crescent Star vs. Shifa International Hospitals |
| Century Insurance vs. Soneri Bank | Century Insurance vs. Universal Insurance | Century Insurance vs. Crescent Star Insurance | Century Insurance vs. Allied Bank |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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