Correlation Between Crescent Star and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Crescent Star and Pakistan Telecommunicatio 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 Telecommunicatio 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 Telecommunication, you can compare the effects of market volatilities on Crescent Star and Pakistan Telecommunicatio 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 Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Pakistan Telecommunicatio.
Diversification Opportunities for Crescent Star and Pakistan Telecommunicatio
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crescent and Pakistan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio 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 Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Crescent Star i.e., Crescent Star and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Crescent Star and Pakistan Telecommunicatio
Assuming the 90 days trading horizon Crescent Star is expected to generate 1.04 times less return on investment than Pakistan Telecommunicatio. But when comparing it to its historical volatility, Crescent Star Insurance is 1.31 times less risky than Pakistan Telecommunicatio. It trades about 0.22 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,558 in Pakistan Telecommunication on August 27, 2024 and sell it today you would earn a total of 192.00 from holding Pakistan Telecommunication or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Star Insurance vs. Pakistan Telecommunication
Performance |
| Timeline |
| Crescent Star Insurance |
| Pakistan Telecommunicatio |
Crescent Star and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and Pakistan Telecommunicatio
The main advantage of trading using opposite Crescent Star and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, Pakistan Telecommunicatio 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 Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| Crescent Star vs. National Foods | Crescent Star vs. Avanceon | Crescent Star vs. Security Investment Bank | Crescent Star vs. ITTEFAQ Iron Industries |
| Pakistan Telecommunicatio vs. Masood Textile Mills | Pakistan Telecommunicatio vs. Fauji Foods | Pakistan Telecommunicatio vs. KSB Pumps | Pakistan Telecommunicatio vs. Mari Petroleum |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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