Correlation Between ES Ceramics and Crescendo Bhd

Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Crescendo Bhd 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 ES Ceramics and Crescendo Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ES Ceramics Technology and Crescendo Bhd, you can compare the effects of market volatilities on ES Ceramics and Crescendo Bhd 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 ES Ceramics with a short position of Crescendo Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Crescendo Bhd.

Diversification Opportunities for ES Ceramics and Crescendo Bhd

0.21

Correlation Coefficient

ES Ceramics  Crescendo Bhd

Modest diversification

The 3 months correlation between 0100 and Crescendo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Crescendo Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescendo Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Crescendo Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescendo Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and Crescendo Bhd go up and down completely randomly.

Pair Corralation between ES Ceramics and Crescendo Bhd

Assuming the 90 days trading horizon ES Ceramics is expected to generate 16.99 times less return on investment than Crescendo Bhd. In addition to that, ES Ceramics is 1.31 times more volatile than Crescendo Bhd. It trades about 0.01 of its total potential returns per unit of risk. Crescendo Bhd is currently generating about 0.13 per unit of volatility. If you would invest  37.00  in Crescendo Bhd on October 4, 2024 and sell it today you would earn a total of  116.00  from holding Crescendo Bhd or generate 313.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.7%
Values	Daily Returns

ES Ceramics Technology  vs.  Crescendo Bhd

ES Ceramics Technology

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, ES Ceramics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Crescendo Bhd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crescendo Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crescendo Bhd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ES Ceramics and Crescendo Bhd

The main advantage of trading using opposite ES Ceramics and Crescendo Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Crescendo Bhd 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 Crescendo Bhd will offset losses from the drop in Crescendo Bhd's long position.

The idea behind ES Ceramics Technology and Crescendo Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.