Correlation Between Beco Steel and East West
Can any of the company-specific risk be diversified away by investing in both Beco Steel 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 Beco Steel and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beco Steel and East West Insurance, you can compare the effects of market volatilities on Beco Steel 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 Beco Steel with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beco Steel and East West.
Diversification Opportunities for Beco Steel and East West
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beco and East is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Beco Steel and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Insurance and Beco 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 Beco Steel 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 Insurance has no effect on the direction of Beco Steel i.e., Beco Steel and East West go up and down completely randomly.
Pair Corralation between Beco Steel and East West
Assuming the 90 days trading horizon Beco Steel is expected to generate 1.05 times more return on investment than East West. However, Beco Steel is 1.05 times more volatile than East West Insurance. It trades about 0.26 of its potential returns per unit of risk. East West Insurance is currently generating about 0.2 per unit of risk. If you would invest 620.00 in Beco Steel on September 12, 2024 and sell it today you would earn a total of 222.00 from holding Beco Steel or generate 35.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Beco Steel vs. East West Insurance
Performance |
| Timeline |
| Beco Steel |
| East West Insurance |
Beco Steel and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beco Steel and East West
The main advantage of trading using opposite Beco Steel and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beco Steel 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.| Beco Steel vs. WorldCall Telecom | Beco Steel vs. Ghandhara Automobile | Beco Steel vs. Data Agro | Beco Steel vs. ITTEFAQ Iron Industries |
| East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Century Insurance | East West vs. Reliance Weaving Mills |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |