Correlation Between Escorts Investment and Crescent Star
Can any of the company-specific risk be diversified away by investing in both Escorts Investment 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 Escorts Investment and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Escorts Investment Bank and Crescent Star Insurance, you can compare the effects of market volatilities on Escorts Investment 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 Escorts Investment with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escorts Investment and Crescent Star.
Diversification Opportunities for Escorts Investment and Crescent Star
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Escorts and Crescent is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Escorts Investment Bank 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 Escorts Investment 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 Escorts Investment Bank 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 Escorts Investment i.e., Escorts Investment and Crescent Star go up and down completely randomly.
Pair Corralation between Escorts Investment and Crescent Star
Assuming the 90 days trading horizon Escorts Investment is expected to generate 59.04 times less return on investment than Crescent Star. But when comparing it to its historical volatility, Escorts Investment Bank is 1.03 times less risky than Crescent Star. It trades about 0.0 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 205.00 in Crescent Star Insurance on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Crescent Star Insurance or generate 46.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.5% |
| Values | Daily Returns |
Escorts Investment Bank vs. Crescent Star Insurance
Performance |
| Timeline |
| Escorts Investment Bank |
| Crescent Star Insurance |
Escorts Investment and Crescent Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Escorts Investment and Crescent Star
The main advantage of trading using opposite Escorts Investment and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escorts Investment 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.| Escorts Investment vs. TPL Insurance | Escorts Investment vs. Reliance Insurance Co | Escorts Investment vs. Security Investment Bank | Escorts Investment vs. Crescent Star Insurance |
| Crescent Star vs. Big Bird Foods | Crescent Star vs. Unity Foods | Crescent Star vs. Unilever Pakistan Foods | Crescent Star vs. MCB Investment Manag |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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