Correlation Between Crescent Star and JS Bank

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

Diversification Opportunities for Crescent Star and JS Bank

0.41

Correlation Coefficient

Crescent Star  JS Bank

Very weak diversification

The 3 months correlation between Crescent and JSBL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and JS Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Bank 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 JS Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Bank has no effect on the direction of Crescent Star i.e., Crescent Star and JS Bank go up and down completely randomly.

Pair Corralation between Crescent Star and JS Bank

Assuming the 90 days trading horizon Crescent Star is expected to generate 34.7 times less return on investment than JS Bank. But when comparing it to its historical volatility, Crescent Star Insurance is 1.19 times less risky than JS Bank. It trades about 0.01 of its potential returns per unit of risk. JS Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  934.00  in JS Bank on October 11, 2024 and sell it today you would earn a total of  107.00  from holding JS Bank or generate 11.46% 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.  JS Bank

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.

JS Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JS Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Star and JS Bank

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

The idea behind Crescent Star Insurance and JS Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.