Correlation Between Engro Polymer and Crescent Star
Can any of the company-specific risk be diversified away by investing in both Engro Polymer and Crescent Star 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 Engro Polymer and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engro Polymer Chemicals and Crescent Star Insurance, you can compare the effects of market volatilities on Engro Polymer and Crescent Star 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 Engro Polymer with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engro Polymer and Crescent Star.
Diversification Opportunities for Engro Polymer and Crescent Star
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Engro and Crescent is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Engro Polymer Chemicals and Crescent Star Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Star Insurance and Engro Polymer 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 Engro Polymer Chemicals are associated (or correlated) with Crescent Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Star Insurance has no effect on the direction of Engro Polymer i.e., Engro Polymer and Crescent Star go up and down completely randomly.
Pair Corralation between Engro Polymer and Crescent Star
Assuming the 90 days trading horizon Engro Polymer Chemicals is expected to under-perform the Crescent Star. But the stock apears to be less risky and, when comparing its historical volatility, Engro Polymer Chemicals is 2.4 times less risky than Crescent Star. The stock trades about -0.01 of its potential returns per unit of risk. The Crescent Star Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 143.00 in Crescent Star Insurance on November 1, 2024 and sell it today you would earn a total of 133.00 from holding Crescent Star Insurance or generate 93.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.38% |
| Values | Daily Returns |
Engro Polymer Chemicals vs. Crescent Star Insurance
Performance |
| Timeline |
| Engro Polymer Chemicals |
| Crescent Star Insurance |
Engro Polymer and Crescent Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engro Polymer and Crescent Star
The main advantage of trading using opposite Engro Polymer and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engro Polymer position performs unexpectedly, Crescent Star 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 Crescent Star will offset losses from the drop in Crescent Star's long position.| Engro Polymer vs. Masood Textile Mills | Engro Polymer vs. Fauji Foods | Engro Polymer vs. KSB Pumps | Engro Polymer vs. Mari Petroleum |
| Crescent Star vs. ORIX Leasing Pakistan | Crescent Star vs. Fateh Sports Wear | Crescent Star vs. Matco Foods | Crescent Star vs. Shifa International Hospitals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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