Correlation Between Leader Steel and Crescendo Bhd

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

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

Diversification Opportunities for Leader Steel and Crescendo Bhd

-0.3

Correlation Coefficient

Leader Steel  Crescendo Bhd

Very good diversification

The 3 months correlation between Leader and Crescendo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings and Crescendo Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescendo Bhd and Leader Steel 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 Leader Steel Holdings 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 Leader Steel i.e., Leader Steel and Crescendo Bhd go up and down completely randomly.

Pair Corralation between Leader Steel and Crescendo Bhd

Assuming the 90 days trading horizon Leader Steel is expected to generate 13.68 times less return on investment than Crescendo Bhd. In addition to that, Leader Steel is 1.36 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  36.00  in Crescendo Bhd on October 10, 2024 and sell it today you would earn a total of  110.00  from holding Crescendo Bhd or generate 305.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.1%
Values	Daily Returns

Leader Steel Holdings  vs.  Crescendo Bhd

Leader Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Steel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Crescendo Bhd

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Leader Steel and Crescendo Bhd

The main advantage of trading using opposite Leader Steel and Crescendo Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel 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 Leader Steel Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.