Correlation Between Asia United and East West
Can any of the company-specific risk be diversified away by investing in both Asia United and East West 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 East West 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 East West Banking, you can compare the effects of market volatilities on Asia United and East West 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 East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia United and East West.
Diversification Opportunities for Asia United and East West
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and East is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and East West Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Banking 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 East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Banking has no effect on the direction of Asia United i.e., Asia United and East West go up and down completely randomly.
Pair Corralation between Asia United and East West
Assuming the 90 days trading horizon Asia United Bank is expected to generate 1.43 times more return on investment than East West. However, Asia United is 1.43 times more volatile than East West Banking. It trades about 0.06 of its potential returns per unit of risk. East West Banking is currently generating about -0.12 per unit of risk. If you would invest 6,100 in Asia United Bank on August 25, 2024 and sell it today you would earn a total of 130.00 from holding Asia United Bank or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia United Bank vs. East West Banking
Performance |
| Timeline |
| Asia United Bank |
| East West Banking |
Asia United and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia United and East West
The main advantage of trading using opposite Asia United and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia United position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Asia United vs. BDO Unibank | Asia United vs. Metropolitan Bank Trust | Asia United vs. Security Bank Corp | Asia United vs. Union Bank of |
| East West vs. Metropolitan Bank Trust | East West vs. Prime Media Holdings | East West vs. Metro Retail Stores | East West vs. Jollibee Foods Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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