Correlation Between Thatta Cement and Crescent Star
Can any of the company-specific risk be diversified away by investing in both Thatta Cement 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 Thatta Cement and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and Crescent Star Insurance, you can compare the effects of market volatilities on Thatta Cement 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 Thatta Cement with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and Crescent Star.
Diversification Opportunities for Thatta Cement and Crescent Star
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thatta and Crescent is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement 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 Thatta Cement 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 Thatta Cement 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 Thatta Cement i.e., Thatta Cement and Crescent Star go up and down completely randomly.
Pair Corralation between Thatta Cement and Crescent Star
Assuming the 90 days trading horizon Thatta Cement is expected to generate 0.78 times more return on investment than Crescent Star. However, Thatta Cement is 1.29 times less risky than Crescent Star. It trades about 0.2 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.05 per unit of risk. If you would invest 1,180 in Thatta Cement on October 30, 2024 and sell it today you would earn a total of 19,076 from holding Thatta Cement or generate 1616.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Thatta Cement vs. Crescent Star Insurance
Performance |
| Timeline |
| Thatta Cement |
| Crescent Star Insurance |
Thatta Cement and Crescent Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and Crescent Star
The main advantage of trading using opposite Thatta Cement and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement 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.| Thatta Cement vs. Pakistan Tobacco | Thatta Cement vs. Avanceon | Thatta Cement vs. NetSol Technologies | Thatta Cement vs. Adamjee Insurance |
| Crescent Star vs. Matco Foods | Crescent Star vs. Wah Nobel Chemicals | Crescent Star vs. Sardar Chemical Industries | Crescent Star vs. Fauji Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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