Correlation Between Crescent Star and Nimir Industrial

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

Diversification Opportunities for Crescent Star and Nimir Industrial

-0.06

Correlation Coefficient

Crescent Star  Nimir Industrial

Good diversification

The 3 months correlation between Crescent and Nimir is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Star Insurance and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical 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 Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of Crescent Star i.e., Crescent Star and Nimir Industrial go up and down completely randomly.

Pair Corralation between Crescent Star and Nimir Industrial

Assuming the 90 days trading horizon Crescent Star Insurance is expected to under-perform the Nimir Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Star Insurance is 1.29 times less risky than Nimir Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Nimir Industrial Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13,853  in Nimir Industrial Chemical on December 24, 2024 and sell it today you would earn a total of  61.00  from holding Nimir Industrial Chemical or generate 0.44% return on investment over 90 days.

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

Crescent Star Insurance  vs.  Nimir Industrial Chemical

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 somewhat strong basic indicators, Crescent Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nimir Industrial Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nimir Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crescent Star and Nimir Industrial

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

The idea behind Crescent Star Insurance and Nimir Industrial Chemical 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.