Correlation Between Aisha Steel and Crescent Star

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

By analyzing existing cross correlation between Aisha Steel Mills and Crescent Star Insurance, you can compare the effects of market volatilities on Aisha Steel 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 Aisha Steel with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Crescent Star.

Diversification Opportunities for Aisha Steel and Crescent Star

-0.3

Correlation Coefficient

Aisha Steel  Crescent Star

Very good diversification

The 3 months correlation between Aisha and Crescent is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills 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 Aisha 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 Aisha Steel Mills 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 Aisha Steel i.e., Aisha Steel and Crescent Star go up and down completely randomly.

Pair Corralation between Aisha Steel and Crescent Star

Assuming the 90 days trading horizon Aisha Steel is expected to generate 1.96 times less return on investment than Crescent Star. But when comparing it to its historical volatility, Aisha Steel Mills is 1.45 times less risky than Crescent Star. It trades about 0.04 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Crescent Star Insurance on December 2, 2024 and sell it today you would earn a total of  156.00  from holding Crescent Star Insurance or generate 122.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Aisha Steel Mills  vs.  Crescent Star Insurance

Aisha Steel Mills

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aisha Steel Mills are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Aisha Steel reported solid returns over the last few months and may actually be approaching a breakup point.

Crescent Star Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Star Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aisha Steel and Crescent Star

The main advantage of trading using opposite Aisha Steel and Crescent Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel 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 Aisha Steel Mills 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.