Correlation Between MCB Investment and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both MCB Investment 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 MCB Investment and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Investment Manag and Crescent Steel Allied, you can compare the effects of market volatilities on MCB Investment 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 MCB Investment with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Crescent Steel.
Diversification Opportunities for MCB Investment and Crescent Steel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MCB and Crescent is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag 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 MCB 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 MCB Investment Manag 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 MCB Investment i.e., MCB Investment and Crescent Steel go up and down completely randomly.
Pair Corralation between MCB Investment and Crescent Steel
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.0 times more return on investment than Crescent Steel. However, MCB Investment Manag is 1.0 times less risky than Crescent Steel. It trades about 0.47 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about 0.02 per unit of risk. If you would invest 3,987 in MCB Investment Manag on August 31, 2024 and sell it today you would earn a total of 1,829 from holding MCB Investment Manag or generate 45.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Investment Manag vs. Crescent Steel Allied
Performance |
| Timeline |
| MCB Investment Manag |
| Crescent Steel Allied |
MCB Investment and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Crescent Steel
The main advantage of trading using opposite MCB Investment and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment 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.| MCB Investment vs. Habib Insurance | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills | MCB Investment vs. Media Times |
| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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