Correlation Between COL Financial and East West
Can any of the company-specific risk be diversified away by investing in both COL Financial 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 COL Financial and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COL Financial Group and East West Banking, you can compare the effects of market volatilities on COL Financial 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 COL Financial with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Financial and East West.
Diversification Opportunities for COL Financial and East West
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COL and East is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group 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 COL Financial 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 COL Financial Group 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 COL Financial i.e., COL Financial and East West go up and down completely randomly.
Pair Corralation between COL Financial and East West
Assuming the 90 days trading horizon COL Financial Group is expected to generate 2.35 times more return on investment than East West. However, COL Financial is 2.35 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 -0.16 per unit of risk. If you would invest 165.00 in COL Financial Group on November 2, 2024 and sell it today you would lose (4.00) from holding COL Financial Group or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
COL Financial Group vs. East West Banking
Performance |
| Timeline |
| COL Financial Group |
| East West Banking |
COL Financial and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COL Financial and East West
The main advantage of trading using opposite COL Financial and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COL Financial 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.| COL Financial vs. Rizal Commercial Banking | COL Financial vs. Crown Asia Chemicals | COL Financial vs. Philex Mining Corp | COL Financial vs. Union Bank of |
| East West vs. Crown Asia Chemicals | East West vs. Rizal Commercial Banking | East West vs. Security Bank Corp | East West vs. Integrated Micro Electronics |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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