Correlation Between Crescent Star and Askari General

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

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

Diversification Opportunities for Crescent Star and Askari General

0.54

Correlation Coefficient

Crescent Star  Askari General

Very weak diversification

The 3 months correlation between Crescent and Askari is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Crescent Star 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 Crescent Star Insurance are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Crescent Star i.e., Crescent Star and Askari General go up and down completely randomly.

Pair Corralation between Crescent Star and Askari General

Assuming the 90 days trading horizon Crescent Star Insurance is expected to under-perform the Askari General. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Star Insurance is 1.03 times less risky than Askari General. The stock trades about -0.05 of its potential returns per unit of risk. The Askari General Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,916  in Askari General Insurance on October 10, 2024 and sell it today you would earn a total of  81.00  from holding Askari General Insurance or generate 2.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Crescent Star Insurance  vs.  Askari General Insurance

Crescent Star Insurance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Star Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Crescent Star sustained solid returns over the last few months and may actually be approaching a breakup point.

Askari General Insurance

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Askari General Insurance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Askari General sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Star and Askari General

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

The idea behind Crescent Star Insurance and Askari General 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.