Correlation Between East West and Prime Media
Can any of the company-specific risk be diversified away by investing in both East West and Prime Media 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 Prime Media 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 Prime Media Holdings, you can compare the effects of market volatilities on East West and Prime Media 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 Prime Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Prime Media.
Diversification Opportunities for East West and Prime Media
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between East and Prime is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of East West i.e., East West and Prime Media go up and down completely randomly.
Pair Corralation between East West and Prime Media
Assuming the 90 days trading horizon East West Banking is expected to under-perform the Prime Media. But the stock apears to be less risky and, when comparing its historical volatility, East West Banking is 4.86 times less risky than Prime Media. The stock trades about -0.04 of its potential returns per unit of risk. The Prime Media Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Prime Media Holdings on November 4, 2024 and sell it today you would earn a total of 4.00 from holding Prime Media Holdings or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
East West Banking vs. Prime Media Holdings
Performance |
| Timeline |
| East West Banking |
| Prime Media Holdings |
East West and Prime Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Prime Media
The main advantage of trading using opposite East West and Prime Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Prime Media 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 Prime Media will offset losses from the drop in Prime Media'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 |
| Prime Media vs. Premiere Entertainment | Prime Media vs. National Reinsurance | Prime Media vs. Lepanto Consolidated Mining | Prime Media vs. Converge Information Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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