Correlation Between Crescent Star and K Electric

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

Diversification Opportunities for Crescent Star and K Electric

0.71

Correlation Coefficient

Crescent Star  K Electric

Poor diversification

The 3 months correlation between Crescent and KEL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric 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 K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Crescent Star i.e., Crescent Star and K Electric go up and down completely randomly.

Pair Corralation between Crescent Star and K Electric

Assuming the 90 days trading horizon Crescent Star Insurance is expected to under-perform the K Electric. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Star Insurance is 1.49 times less risky than K Electric. The stock trades about -0.15 of its potential returns per unit of risk. The K Electric is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  573.00  in K Electric on December 3, 2024 and sell it today you would lose (128.00) from holding K Electric or give up 22.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Crescent Star Insurance  vs.  K Electric

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.

K Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days K Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Crescent Star and K Electric

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

The idea behind Crescent Star Insurance and K Electric 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.