Correlation Between Pak Gulf and Crescent Star
Can any of the company-specific risk be diversified away by investing in both Pak Gulf 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 Pak Gulf and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Gulf Leasing and Crescent Star Insurance, you can compare the effects of market volatilities on Pak Gulf 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 Pak Gulf with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Gulf and Crescent Star.
Diversification Opportunities for Pak Gulf and Crescent Star
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pak and Crescent is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pak Gulf Leasing 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 Pak Gulf 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 Pak Gulf Leasing 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 Pak Gulf i.e., Pak Gulf and Crescent Star go up and down completely randomly.
Pair Corralation between Pak Gulf and Crescent Star
Assuming the 90 days trading horizon Pak Gulf is expected to generate 1.16 times less return on investment than Crescent Star. In addition to that, Pak Gulf is 1.59 times more volatile than Crescent Star Insurance. It trades about 0.15 of its total potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.28 per unit of volatility. If you would invest 262.00 in Crescent Star Insurance on August 30, 2024 and sell it today you would earn a total of 56.00 from holding Crescent Star Insurance or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pak Gulf Leasing vs. Crescent Star Insurance
Performance |
| Timeline |
| Pak Gulf Leasing |
| Crescent Star Insurance |
Pak Gulf and Crescent Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Gulf and Crescent Star
The main advantage of trading using opposite Pak Gulf and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Gulf 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.| Pak Gulf vs. Masood Textile Mills | Pak Gulf vs. Fauji Foods | Pak Gulf vs. KSB Pumps | Pak Gulf vs. Mari Petroleum |
| Crescent Star vs. Masood Textile Mills | Crescent Star vs. Fauji Foods | Crescent Star vs. KSB Pumps | Crescent Star 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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