Correlation Between Crescent Steel and Orient Rental

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

Diversification Opportunities for Crescent Steel and Orient Rental

-0.36

Correlation Coefficient

Crescent Steel  Orient Rental

Very good diversification

The 3 months correlation between Crescent and Orient is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Steel Allied and Orient Rental Modaraba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Rental Modaraba 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 Orient Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Rental Modaraba has no effect on the direction of Crescent Steel i.e., Crescent Steel and Orient Rental go up and down completely randomly.

Pair Corralation between Crescent Steel and Orient Rental

Assuming the 90 days trading horizon Crescent Steel Allied is expected to under-perform the Orient Rental. In addition to that, Crescent Steel is 1.09 times more volatile than Orient Rental Modaraba. It trades about -0.05 of its total potential returns per unit of risk. Orient Rental Modaraba is currently generating about 0.12 per unit of volatility. If you would invest  865.00  in Orient Rental Modaraba on April 23, 2025 and sell it today you would earn a total of  202.00  from holding Orient Rental Modaraba or generate 23.35% 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.  Orient Rental Modaraba

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.

Orient Rental Modaraba

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Rental Modaraba are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Orient Rental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crescent Steel and Orient Rental

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

The idea behind Crescent Steel Allied and Orient Rental Modaraba 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.