Correlation Between Pakistan Tobacco and Crescent Star
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco 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 Pakistan Tobacco and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Crescent Star Insurance, you can compare the effects of market volatilities on Pakistan Tobacco 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 Pakistan Tobacco with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Crescent Star.
Diversification Opportunities for Pakistan Tobacco and Crescent Star
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pakistan and Crescent is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco 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 Pakistan Tobacco 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 Pakistan Tobacco 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 Pakistan Tobacco i.e., Pakistan Tobacco and Crescent Star go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Crescent Star
Assuming the 90 days trading horizon Pakistan Tobacco is expected to generate 1.31 times less return on investment than Crescent Star. But when comparing it to its historical volatility, Pakistan Tobacco is 1.29 times less risky than Crescent Star. It trades about 0.05 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Crescent Star Insurance on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Crescent Star Insurance or generate 81.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.29% |
| Values | Daily Returns |
Pakistan Tobacco vs. Crescent Star Insurance
Performance |
| Timeline |
| Pakistan Tobacco |
| Crescent Star Insurance |
Pakistan Tobacco and Crescent Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Crescent Star
The main advantage of trading using opposite Pakistan Tobacco and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco 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.| Pakistan Tobacco vs. Air Link Communication | Pakistan Tobacco vs. Murree Brewery | Pakistan Tobacco vs. Wah Nobel Chemicals | Pakistan Tobacco vs. Pakistan Telecommunication |
| Crescent Star vs. Hi Tech Lubricants | Crescent Star vs. WorldCall Telecom | Crescent Star vs. Aisha Steel Mills | Crescent Star vs. Engro Polymer Chemicals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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