Correlation Between Orient Rental and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both Orient Rental 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 Orient Rental and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Rental Modaraba and Crescent Steel Allied, you can compare the effects of market volatilities on Orient Rental 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 Orient Rental with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and Crescent Steel.
Diversification Opportunities for Orient Rental and Crescent Steel
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Orient and Crescent is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba 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 Orient Rental 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 Orient Rental Modaraba 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 Orient Rental i.e., Orient Rental and Crescent Steel go up and down completely randomly.
Pair Corralation between Orient Rental and Crescent Steel
Assuming the 90 days trading horizon Orient Rental Modaraba is expected to generate 0.54 times more return on investment than Crescent Steel. However, Orient Rental Modaraba is 1.84 times less risky than Crescent Steel. It trades about 0.02 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about -0.08 per unit of risk. If you would invest 800.00 in Orient Rental Modaraba on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Orient Rental Modaraba or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Orient Rental Modaraba vs. Crescent Steel Allied
Performance |
| Timeline |
| Orient Rental Modaraba |
| Crescent Steel Allied |
Orient Rental and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and Crescent Steel
The main advantage of trading using opposite Orient Rental and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental 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.| Orient Rental vs. Unity Foods | Orient Rental vs. Oil and Gas | Orient Rental vs. Data Agro | Orient Rental vs. Nimir Industrial Chemical |
| Crescent Steel vs. Crescent Star Insurance | Crescent Steel vs. Shaheen Insurance | Crescent Steel vs. Unilever Pakistan Foods | Crescent Steel vs. Pakistan Reinsurance |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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