Correlation Between Crescent Star and KOT Addu
Can any of the company-specific risk be diversified away by investing in both Crescent Star and KOT Addu 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 KOT Addu 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 KOT Addu Power, you can compare the effects of market volatilities on Crescent Star and KOT Addu 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 KOT Addu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and KOT Addu.
Diversification Opportunities for Crescent Star and KOT Addu
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Crescent and KOT is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and KOT Addu Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOT Addu Power 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 KOT Addu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOT Addu Power has no effect on the direction of Crescent Star i.e., Crescent Star and KOT Addu go up and down completely randomly.
Pair Corralation between Crescent Star and KOT Addu
Assuming the 90 days trading horizon Crescent Star Insurance is expected to generate 2.21 times more return on investment than KOT Addu. However, Crescent Star is 2.21 times more volatile than KOT Addu Power. It trades about 0.05 of its potential returns per unit of risk. KOT Addu Power is currently generating about 0.09 per unit of risk. If you would invest 243.00 in Crescent Star Insurance on September 4, 2024 and sell it today you would earn a total of 103.00 from holding Crescent Star Insurance or generate 42.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Star Insurance vs. KOT Addu Power
Performance |
| Timeline |
| Crescent Star Insurance |
| KOT Addu Power |
Crescent Star and KOT Addu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and KOT Addu
The main advantage of trading using opposite Crescent Star and KOT Addu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, KOT Addu 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 KOT Addu will offset losses from the drop in KOT Addu's long position.| Crescent Star vs. Oil and Gas | Crescent Star vs. Pakistan State Oil | Crescent Star vs. Pakistan Petroleum | Crescent Star vs. Fauji Fertilizer |
| KOT Addu vs. Pakistan Telecommunication | KOT Addu vs. Big Bird Foods | KOT Addu vs. Crescent Star Insurance | KOT Addu vs. MCB Investment Manag |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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