Correlation Between Ittehad Chemicals and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and Crescent Steel 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 Ittehad Chemicals and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and Crescent Steel Allied, you can compare the effects of market volatilities on Ittehad Chemicals and Crescent Steel 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 Ittehad Chemicals with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and Crescent Steel.
Diversification Opportunities for Ittehad Chemicals and Crescent Steel
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ittehad and Crescent is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and Crescent Steel Allied in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Steel Allied and Ittehad Chemicals 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 Ittehad Chemicals are associated (or correlated) with Crescent Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Steel Allied has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and Crescent Steel go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and Crescent Steel
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 0.98 times more return on investment than Crescent Steel. However, Ittehad Chemicals is 1.02 times less risky than Crescent Steel. It trades about 0.15 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about 0.03 per unit of risk. If you would invest 5,684 in Ittehad Chemicals on October 25, 2024 and sell it today you would earn a total of 1,438 from holding Ittehad Chemicals or generate 25.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ittehad Chemicals vs. Crescent Steel Allied
Performance |
| Timeline |
| Ittehad Chemicals |
| Crescent Steel Allied |
Ittehad Chemicals and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and Crescent Steel
The main advantage of trading using opposite Ittehad Chemicals and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, Crescent Steel 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 Steel will offset losses from the drop in Crescent Steel's long position.| Ittehad Chemicals vs. Pakistan Synthetics | Ittehad Chemicals vs. Orient Rental Modaraba | Ittehad Chemicals vs. EFU General Insurance | Ittehad Chemicals vs. Synthetic Products Enterprises |
| Crescent Steel vs. Engro Polymer Chemicals | Crescent Steel vs. ITTEFAQ Iron Industries | Crescent Steel vs. Aisha Steel Mills | Crescent Steel vs. Honda Atlas Cars |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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