Correlation Between Unilever Pakistan and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both Unilever Pakistan 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 Unilever Pakistan and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Pakistan Foods and Crescent Steel Allied, you can compare the effects of market volatilities on Unilever Pakistan 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 Unilever Pakistan with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and Crescent Steel.
Diversification Opportunities for Unilever Pakistan and Crescent Steel
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and Crescent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods 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 Unilever Pakistan 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 Unilever Pakistan Foods 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 Unilever Pakistan i.e., Unilever Pakistan and Crescent Steel go up and down completely randomly.
Pair Corralation between Unilever Pakistan and Crescent Steel
Assuming the 90 days trading horizon Unilever Pakistan is expected to generate 68.2 times less return on investment than Crescent Steel. But when comparing it to its historical volatility, Unilever Pakistan Foods is 2.13 times less risky than Crescent Steel. It trades about 0.0 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,365 in Crescent Steel Allied on September 1, 2024 and sell it today you would earn a total of 7,899 from holding Crescent Steel Allied or generate 334.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.06% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. Crescent Steel Allied
Performance |
| Timeline |
| Unilever Pakistan Foods |
| Crescent Steel Allied |
Unilever Pakistan and Crescent Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and Crescent Steel
The main advantage of trading using opposite Unilever Pakistan and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan 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.| Unilever Pakistan vs. Century Insurance | Unilever Pakistan vs. JS Global Banking | Unilever Pakistan vs. Reliance Insurance Co | Unilever Pakistan vs. Soneri Bank |
| Crescent Steel vs. Masood Textile Mills | Crescent Steel vs. Fauji Foods | Crescent Steel vs. KSB Pumps | Crescent Steel 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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