Correlation Between Crescent Star and Al Shaheer

Can any of the company-specific risk be diversified away by investing in both Crescent Star and Al Shaheer 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 Al Shaheer 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 Al Shaheer, you can compare the effects of market volatilities on Crescent Star and Al Shaheer 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 Al Shaheer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Star and Al Shaheer.

Diversification Opportunities for Crescent Star and Al Shaheer

0.08

Correlation Coefficient

Crescent Star  Al Shaheer

Significant diversification

The 3 months correlation between Crescent and ASC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Al Shaheer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Shaheer 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 Al Shaheer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Shaheer has no effect on the direction of Crescent Star i.e., Crescent Star and Al Shaheer go up and down completely randomly.

Pair Corralation between Crescent Star and Al Shaheer

Assuming the 90 days trading horizon Crescent Star Insurance is expected to under-perform the Al Shaheer. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Star Insurance is 1.33 times less risky than Al Shaheer. The stock trades about -0.05 of its potential returns per unit of risk. The Al Shaheer is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Al Shaheer on December 21, 2024 and sell it today you would lose (2.00) from holding Al Shaheer or give up 0.27% of portfolio value over 90 days.

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

Crescent Star Insurance  vs.  Al Shaheer

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Al Shaheer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Shaheer has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Al Shaheer is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crescent Star and Al Shaheer

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

The idea behind Crescent Star Insurance and Al Shaheer 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.