Correlation Between Asia United and EEI Corp
Can any of the company-specific risk be diversified away by investing in both Asia United and EEI Corp 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 Asia United and EEI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia United Bank and EEI Corp, you can compare the effects of market volatilities on Asia United and EEI Corp 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 Asia United with a short position of EEI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia United and EEI Corp.
Diversification Opportunities for Asia United and EEI Corp
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and EEI is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and EEI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EEI Corp and Asia United 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 Asia United Bank are associated (or correlated) with EEI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EEI Corp has no effect on the direction of Asia United i.e., Asia United and EEI Corp go up and down completely randomly.
Pair Corralation between Asia United and EEI Corp
Assuming the 90 days trading horizon Asia United Bank is expected to generate 0.55 times more return on investment than EEI Corp. However, Asia United Bank is 1.83 times less risky than EEI Corp. It trades about 0.2 of its potential returns per unit of risk. EEI Corp is currently generating about -0.14 per unit of risk. If you would invest 6,100 in Asia United Bank on October 24, 2024 and sell it today you would earn a total of 1,160 from holding Asia United Bank or generate 19.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Asia United Bank vs. EEI Corp
Performance |
| Timeline |
| Asia United Bank |
| EEI Corp |
Asia United and EEI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia United and EEI Corp
The main advantage of trading using opposite Asia United and EEI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia United position performs unexpectedly, EEI Corp 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 EEI Corp will offset losses from the drop in EEI Corp's long position.| Asia United vs. Robinsons Retail Holdings | Asia United vs. Apex Mining Co | Asia United vs. Figaro Coffee Group | Asia United vs. Union Bank of |
| EEI Corp vs. Lepanto Consolidated Mining | EEI Corp vs. Top Frontier Investment | EEI Corp vs. National Reinsurance | EEI Corp vs. Rizal Commercial Banking |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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