Correlation Between Crescent Steel and Amreli Steels

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

Diversification Opportunities for Crescent Steel and Amreli Steels

0.33

Correlation Coefficient

Crescent Steel  Amreli Steels

Weak diversification

The 3 months correlation between Crescent and Amreli is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels and Crescent Steel 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 Steel Allied 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 Steel i.e., Crescent Steel and Amreli Steels go up and down completely randomly.

Pair Corralation between Crescent Steel and Amreli Steels

Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the Amreli Steels. In addition to that, Crescent Steel is 1.1 times more volatile than Amreli Steels. It trades about -0.03 of its total potential returns per unit of risk. Amreli Steels is currently generating about 0.01 per unit of volatility. If you would invest  2,188  in Amreli Steels on April 24, 2025 and sell it today you would lose (38.00) from holding Amreli Steels or give up 1.74% of portfolio value over 90 days.

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

Crescent Steel Allied  vs.  Amreli Steels

Crescent Steel Allied

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Steel Allied has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Amreli Steels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amreli Steels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Amreli Steels is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Crescent Steel and Amreli Steels

The main advantage of trading using opposite Crescent Steel and Amreli Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Steel 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 Steel Allied 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.