Correlation Between East West and Premiere Entertainment
Can any of the company-specific risk be diversified away by investing in both East West and Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment, you can compare the effects of market volatilities on East West and Premiere Entertainment 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 Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Premiere Entertainment.
Diversification Opportunities for East West and Premiere Entertainment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between East and Premiere is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment 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 Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of East West i.e., East West and Premiere Entertainment go up and down completely randomly.
Pair Corralation between East West and Premiere Entertainment
Assuming the 90 days trading horizon East West Banking is expected to generate 0.28 times more return on investment than Premiere Entertainment. However, East West Banking is 3.52 times less risky than Premiere Entertainment. It trades about 0.1 of its potential returns per unit of risk. Premiere Entertainment is currently generating about 0.02 per unit of risk. If you would invest 729.00 in East West Banking on November 5, 2024 and sell it today you would earn a total of 251.00 from holding East West Banking or generate 34.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
East West Banking vs. Premiere Entertainment
Performance |
| Timeline |
| East West Banking |
| Premiere Entertainment |
East West and Premiere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Premiere Entertainment
The main advantage of trading using opposite East West and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Premiere Entertainment 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 Premiere Entertainment will offset losses from the drop in Premiere Entertainment's long position.| East West vs. Rizal Commercial Banking | East West vs. Apex Mining Co | East West vs. Transpacific Broadband Group | 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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