Correlation Between AGP and Crescent Star
Can any of the company-specific risk be diversified away by investing in both AGP 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 AGP and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGP and Crescent Star Insurance, you can compare the effects of market volatilities on AGP 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 AGP with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGP and Crescent Star.
Diversification Opportunities for AGP and Crescent Star
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AGP and Crescent is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AGP 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 AGP 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 AGP 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 AGP i.e., AGP and Crescent Star go up and down completely randomly.
Pair Corralation between AGP and Crescent Star
Assuming the 90 days trading horizon AGP is expected to generate 1.0 times more return on investment than Crescent Star. However, AGP is 1.0 times more volatile than Crescent Star Insurance. It trades about 0.1 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about -0.32 per unit of risk. If you would invest 16,250 in AGP on October 4, 2024 and sell it today you would earn a total of 760.00 from holding AGP or generate 4.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AGP vs. Crescent Star Insurance
Performance |
Timeline |
AGP |
Crescent Star Insurance |
AGP and Crescent Star Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AGP and Crescent Star
The main advantage of trading using opposite AGP and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGP 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.The idea behind AGP and Crescent Star Insurance 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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