Correlation Between Crescent Star and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both Crescent Star and TPL Insurance 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 TPL Insurance 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 TPL Insurance, you can compare the effects of market volatilities on Crescent Star and TPL Insurance 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 TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and TPL Insurance.
Diversification Opportunities for Crescent Star and TPL Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crescent and TPL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Insurance 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 TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of Crescent Star i.e., Crescent Star and TPL Insurance go up and down completely randomly.
Pair Corralation between Crescent Star and TPL Insurance
Assuming the 90 days trading horizon Crescent Star Insurance is expected to generate 0.72 times more return on investment than TPL Insurance. However, Crescent Star Insurance is 1.38 times less risky than TPL Insurance. It trades about 0.17 of its potential returns per unit of risk. TPL Insurance is currently generating about 0.06 per unit of risk. If you would invest 275.00 in Crescent Star Insurance on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Crescent Star Insurance or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Star Insurance vs. TPL Insurance
Performance |
| Timeline |
| Crescent Star Insurance |
| TPL Insurance |
Crescent Star and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Star and TPL Insurance
The main advantage of trading using opposite Crescent Star and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Star position performs unexpectedly, TPL Insurance 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 TPL Insurance will offset losses from the drop in TPL Insurance's long position.| Crescent Star vs. Habib Bank | Crescent Star vs. National Bank of | Crescent Star vs. United Bank | Crescent Star vs. MCB Bank |
| TPL Insurance vs. Soneri Bank | TPL Insurance vs. 786 Investment Limited | TPL Insurance vs. Habib Insurance | TPL Insurance vs. Apna Microfinance Bank |
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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