Correlation Between Metropolitan Steel and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel 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 Metropolitan Steel and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Steel Corp and Crescent Steel Allied, you can compare the effects of market volatilities on Metropolitan Steel 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 Metropolitan Steel with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and Crescent Steel.
Diversification Opportunities for Metropolitan Steel and Crescent Steel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metropolitan and Crescent is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp 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 Metropolitan Steel 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 Metropolitan Steel Corp 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 Metropolitan Steel i.e., Metropolitan Steel and Crescent Steel go up and down completely randomly.
Pair Corralation between Metropolitan Steel and Crescent Steel
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the Crescent Steel. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Steel Corp is 2.27 times less risky than Crescent Steel. The stock trades about -0.29 of its potential returns per unit of risk. The Crescent Steel Allied is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 10,775 in Crescent Steel Allied on August 28, 2024 and sell it today you would lose (1,035) from holding Crescent Steel Allied or give up 9.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. Crescent Steel Allied
Performance |
| Timeline |
| Metropolitan Steel Corp |
| Crescent Steel Allied |
Metropolitan Steel and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and Crescent Steel
The main advantage of trading using opposite Metropolitan Steel and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel 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.| Metropolitan Steel vs. Matco Foods | Metropolitan Steel vs. Shifa International Hospitals | Metropolitan Steel vs. Quice Food Industries | Metropolitan Steel vs. JS Investments |
| Crescent Steel vs. Oil and Gas | Crescent Steel vs. Pakistan State Oil | Crescent Steel vs. Pakistan Petroleum | Crescent Steel vs. Engro |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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