Correlation Between EFU General and Crescent Steel
Can any of the company-specific risk be diversified away by investing in both EFU General and Crescent Steel 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 EFU General and Crescent Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFU General Insurance and Crescent Steel Allied, you can compare the effects of market volatilities on EFU General and Crescent Steel 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 EFU General with a short position of Crescent Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFU General and Crescent Steel.
Diversification Opportunities for EFU General and Crescent Steel
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EFU and Crescent is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding EFU General Insurance and Crescent Steel Allied in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Steel Allied and EFU General 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 EFU General Insurance are associated (or correlated) with Crescent Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Steel Allied has no effect on the direction of EFU General i.e., EFU General and Crescent Steel go up and down completely randomly.
Pair Corralation between EFU General and Crescent Steel
Assuming the 90 days trading horizon EFU General Insurance is expected to generate 0.66 times more return on investment than Crescent Steel. However, EFU General Insurance is 1.52 times less risky than Crescent Steel. It trades about 0.1 of its potential returns per unit of risk. Crescent Steel Allied is currently generating about -0.05 per unit of risk. If you would invest 11,747 in EFU General Insurance on April 23, 2025 and sell it today you would earn a total of 1,574 from holding EFU General Insurance or generate 13.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
EFU General Insurance vs. Crescent Steel Allied
Performance |
Timeline |
EFU General Insurance |
Crescent Steel Allied |
EFU General and Crescent Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EFU General and Crescent Steel
The main advantage of trading using opposite EFU General and Crescent Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFU General position performs unexpectedly, Crescent Steel 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 Steel will offset losses from the drop in Crescent Steel's long position.EFU General vs. Security Investment Bank | EFU General vs. Ittehad Chemicals | EFU General vs. The Pakistan Credit | EFU General vs. Faysal Bank |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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