Correlation Between Crescent Star and Amreli Steels

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

Diversification Opportunities for Crescent Star and Amreli Steels

0.6

Correlation Coefficient

Crescent Star  Amreli Steels

Poor diversification

The 3 months correlation between Crescent and Amreli is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels 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 Amreli Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amreli Steels has no effect on the direction of Crescent Star i.e., Crescent Star and Amreli Steels go up and down completely randomly.

Pair Corralation between Crescent Star and Amreli Steels

Assuming the 90 days trading horizon Crescent Star is expected to generate 3.26 times less return on investment than Amreli Steels. In addition to that, Crescent Star is 1.15 times more volatile than Amreli Steels. It trades about 0.06 of its total potential returns per unit of risk. Amreli Steels is currently generating about 0.24 per unit of volatility. If you would invest  1,701  in Amreli Steels on October 9, 2024 and sell it today you would earn a total of  915.00  from holding Amreli Steels or generate 53.79% return on investment over 90 days.

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

Crescent Star Insurance  vs.  Amreli Steels

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.

Amreli Steels

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amreli Steels are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amreli Steels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Star and Amreli Steels

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

The idea behind Crescent Star Insurance and Amreli Steels 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.