Correlation Between Crescent Star and Hi Tech
Can any of the company-specific risk be diversified away by investing in both Crescent Star and Hi Tech 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 Hi Tech 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 Hi Tech Lubricants, you can compare the effects of market volatilities on Crescent Star and Hi Tech 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 Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Hi Tech.
Diversification Opportunities for Crescent Star and Hi Tech
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Crescent and HTL is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants 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 Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Crescent Star i.e., Crescent Star and Hi Tech go up and down completely randomly.
Pair Corralation between Crescent Star and Hi Tech
Assuming the 90 days trading horizon Crescent Star Insurance is expected to generate 0.82 times more return on investment than Hi Tech. However, Crescent Star Insurance is 1.22 times less risky than Hi Tech. It trades about 0.22 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.13 per unit of risk. If you would invest 267.00 in Crescent Star Insurance on August 28, 2024 and sell it today you would earn a total of 33.00 from holding Crescent Star Insurance or generate 12.36% 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. Hi Tech Lubricants
Performance |
| Timeline |
| Crescent Star Insurance |
| Hi Tech Lubricants |
Crescent Star and Hi Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and Hi Tech
The main advantage of trading using opposite Crescent Star and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.| Crescent Star vs. National Foods | Crescent Star vs. Avanceon | Crescent Star vs. Security Investment Bank | Crescent Star vs. ITTEFAQ Iron Industries |
| Hi Tech vs. Al Ghazi Tractors | Hi Tech vs. Shell Pakistan | Hi Tech vs. Nestle Pakistan | Hi Tech vs. Hinopak Motors |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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