Correlation Between Crescent Star and K Electric
Can any of the company-specific risk be diversified away by investing in both Crescent Star and K Electric 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 K Electric 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 K Electric, you can compare the effects of market volatilities on Crescent Star and K Electric 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 K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and K Electric.
Diversification Opportunities for Crescent Star and K Electric
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Crescent and KEL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric 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 K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Crescent Star i.e., Crescent Star and K Electric go up and down completely randomly.
Pair Corralation between Crescent Star and K Electric
Assuming the 90 days trading horizon Crescent Star is expected to generate 1.14 times less return on investment than K Electric. In addition to that, Crescent Star is 1.18 times more volatile than K Electric. It trades about 0.05 of its total potential returns per unit of risk. K Electric is currently generating about 0.07 per unit of volatility. If you would invest 245.00 in K Electric on September 14, 2024 and sell it today you would earn a total of 389.00 from holding K Electric or generate 158.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.38% |
| Values | Daily Returns |
Crescent Star Insurance vs. K Electric
Performance |
| Timeline |
| Crescent Star Insurance |
| K Electric |
Crescent Star and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and K Electric
The main advantage of trading using opposite Crescent Star and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Crescent Star vs. Masood Textile Mills | Crescent Star vs. Fauji Foods | Crescent Star vs. KSB Pumps | Crescent Star vs. Mari Petroleum |
| K Electric vs. Pakistan State Oil | K Electric vs. Oil and Gas | K Electric vs. Lucky Cement | K Electric vs. Engro |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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