Correlation Between Converge Information and East West
Can any of the company-specific risk be diversified away by investing in both Converge Information 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 Converge Information and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Information Communications and East West Banking, you can compare the effects of market volatilities on Converge Information 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 Converge Information with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and East West.
Diversification Opportunities for Converge Information and East West
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Converge and East is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica 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 Converge Information 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 Converge Information Communications 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 Converge Information i.e., Converge Information and East West go up and down completely randomly.
Pair Corralation between Converge Information and East West
Assuming the 90 days trading horizon Converge Information Communications is expected to generate 2.07 times more return on investment than East West. However, Converge Information is 2.07 times more volatile than East West Banking. It trades about 0.11 of its potential returns per unit of risk. East West Banking is currently generating about 0.05 per unit of risk. If you would invest 828.00 in Converge Information Communications on August 25, 2024 and sell it today you would earn a total of 752.00 from holding Converge Information Communications or generate 90.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Converge Information Communica vs. East West Banking
Performance |
| Timeline |
| Converge Information |
| East West Banking |
Converge Information and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Information and East West
The main advantage of trading using opposite Converge Information and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information 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.| Converge Information vs. Atlas Consolidated Mining | Converge Information vs. Suntrust Home Developers | Converge Information vs. Apex Mining Co | Converge Information vs. Crown Asia Chemicals |
| East West vs. Robinsons Retail Holdings | East West vs. Converge Information Communications | East West vs. Atlas Consolidated Mining | East West vs. Lepanto Consolidated Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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