Correlation Between Crescent Steel and Dost Steels

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

Diversification Opportunities for Crescent Steel and Dost Steels

-0.02

Correlation Coefficient

Crescent Steel  Dost Steels

Good diversification

The 3 months correlation between Crescent and Dost is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost 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 Dost Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dost Steels has no effect on the direction of Crescent Steel i.e., Crescent Steel and Dost Steels go up and down completely randomly.

Pair Corralation between Crescent Steel and Dost Steels

Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the Dost Steels. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Steel Allied is 1.13 times less risky than Dost Steels. The stock trades about -0.03 of its potential returns per unit of risk. The Dost Steels is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  716.00  in Dost Steels on April 24, 2025 and sell it today you would earn a total of  136.00  from holding Dost Steels or generate 18.99% return on investment over 90 days.

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

Crescent Steel Allied  vs.  Dost 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.

Dost Steels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dost Steels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Dost Steels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Steel and Dost Steels

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

The idea behind Crescent Steel Allied and Dost 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.

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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 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.