Correlation Between Crescent Star and Pakistan Tobacco
Can any of the company-specific risk be diversified away by investing in both Crescent Star and Pakistan Tobacco 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 Pakistan Tobacco 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 Pakistan Tobacco, you can compare the effects of market volatilities on Crescent Star and Pakistan Tobacco 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 Pakistan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Pakistan Tobacco.
Diversification Opportunities for Crescent Star and Pakistan Tobacco
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Crescent and Pakistan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Pakistan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Tobacco 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 Pakistan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Tobacco has no effect on the direction of Crescent Star i.e., Crescent Star and Pakistan Tobacco go up and down completely randomly.
Pair Corralation between Crescent Star and Pakistan Tobacco
Assuming the 90 days trading horizon Crescent Star Insurance is expected to generate 1.88 times more return on investment than Pakistan Tobacco. However, Crescent Star is 1.88 times more volatile than Pakistan Tobacco. It trades about 0.03 of its potential returns per unit of risk. Pakistan Tobacco is currently generating about -0.32 per unit of risk. If you would invest 281.00 in Crescent Star Insurance on October 29, 2024 and sell it today you would earn a total of 3.00 from holding Crescent Star Insurance or generate 1.07% 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. Pakistan Tobacco
Performance |
| Timeline |
| Crescent Star Insurance |
| Pakistan Tobacco |
Crescent Star and Pakistan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and Pakistan Tobacco
The main advantage of trading using opposite Crescent Star and Pakistan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, Pakistan Tobacco 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 Pakistan Tobacco will offset losses from the drop in Pakistan Tobacco's long position.| Crescent Star vs. IGI Life Insurance | Crescent Star vs. Atlas Insurance | Crescent Star vs. NetSol Technologies | Crescent Star vs. Universal Insurance |
| Pakistan Tobacco vs. Atlas Insurance | Pakistan Tobacco vs. Crescent Star Insurance | Pakistan Tobacco vs. Air Link Communication | Pakistan Tobacco vs. Data Agro |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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