Correlation Between Fateh Sports and Crescent Star

Can any of the company-specific risk be diversified away by investing in both Fateh Sports and Crescent Star 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 Fateh Sports and Crescent Star into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fateh Sports Wear and Crescent Star Insurance, you can compare the effects of market volatilities on Fateh Sports and Crescent Star 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 Fateh Sports with a short position of Crescent Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fateh Sports and Crescent Star.

Diversification Opportunities for Fateh Sports and Crescent Star

0.26

Correlation Coefficient

Fateh Sports  Crescent Star

Modest diversification

The 3 months correlation between Fateh and Crescent is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fateh Sports Wear and Crescent Star Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Star Insurance and Fateh Sports 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 Fateh Sports Wear are associated (or correlated) with Crescent Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Star Insurance has no effect on the direction of Fateh Sports i.e., Fateh Sports and Crescent Star go up and down completely randomly.

Pair Corralation between Fateh Sports and Crescent Star

Assuming the 90 days trading horizon Fateh Sports Wear is expected to generate 1.27 times more return on investment than Crescent Star. However, Fateh Sports is 1.27 times more volatile than Crescent Star Insurance. It trades about 0.08 of its potential returns per unit of risk. Crescent Star Insurance is currently generating about 0.05 per unit of risk. If you would invest  6,248  in Fateh Sports Wear on October 24, 2024 and sell it today you would earn a total of  1,609  from holding Fateh Sports Wear or generate 25.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	32.5%
Values	Daily Returns

Fateh Sports Wear  vs.  Crescent Star Insurance

Fateh Sports Wear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Crescent Star Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Star Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Crescent Star may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fateh Sports and Crescent Star

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

The idea behind Fateh Sports Wear and Crescent Star Insurance 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.