Correlation Between East West and AgriNurture
Can any of the company-specific risk be diversified away by investing in both East West and AgriNurture 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 East West and AgriNurture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Banking and AgriNurture, you can compare the effects of market volatilities on East West and AgriNurture 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 East West with a short position of AgriNurture. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and AgriNurture.
Diversification Opportunities for East West and AgriNurture
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between East and AgriNurture is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and AgriNurture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgriNurture and East West 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 East West Banking are associated (or correlated) with AgriNurture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgriNurture has no effect on the direction of East West i.e., East West and AgriNurture go up and down completely randomly.
Pair Corralation between East West and AgriNurture
Assuming the 90 days trading horizon East West Banking is expected to generate 0.39 times more return on investment than AgriNurture. However, East West Banking is 2.58 times less risky than AgriNurture. It trades about -0.03 of its potential returns per unit of risk. AgriNurture is currently generating about -0.21 per unit of risk. If you would invest 991.00 in East West Banking on September 12, 2024 and sell it today you would lose (6.00) from holding East West Banking or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Banking vs. AgriNurture
Performance |
| Timeline |
| East West Banking |
| AgriNurture |
East West and AgriNurture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and AgriNurture
The main advantage of trading using opposite East West and AgriNurture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, AgriNurture 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 AgriNurture will offset losses from the drop in AgriNurture's long position.| East West vs. BDO Unibank | East West vs. Metropolitan Bank Trust | East West vs. Security Bank Corp | East West vs. Union Bank of |
| AgriNurture vs. East West Banking | AgriNurture vs. Metro Retail Stores | AgriNurture vs. Transpacific Broadband Group | AgriNurture vs. Alliance Select Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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