Correlation Between East West and Semirara Mining
Can any of the company-specific risk be diversified away by investing in both East West and Semirara Mining 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 Semirara Mining 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 Semirara Mining Corp, you can compare the effects of market volatilities on East West and Semirara Mining 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 Semirara Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Semirara Mining.
Diversification Opportunities for East West and Semirara Mining
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between East and Semirara is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Semirara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semirara Mining Corp 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 Semirara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semirara Mining Corp has no effect on the direction of East West i.e., East West and Semirara Mining go up and down completely randomly.
Pair Corralation between East West and Semirara Mining
Assuming the 90 days trading horizon East West Banking is expected to generate 0.85 times more return on investment than Semirara Mining. However, East West Banking is 1.18 times less risky than Semirara Mining. It trades about 0.08 of its potential returns per unit of risk. Semirara Mining Corp is currently generating about 0.06 per unit of risk. If you would invest 610.00 in East West Banking on August 29, 2024 and sell it today you would earn a total of 366.00 from holding East West Banking or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Banking vs. Semirara Mining Corp
Performance |
| Timeline |
| East West Banking |
| Semirara Mining Corp |
East West and Semirara Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Semirara Mining
The main advantage of trading using opposite East West and Semirara Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Semirara Mining 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 Semirara Mining will offset losses from the drop in Semirara Mining's long position.| East West vs. Apex Mining Co | East West vs. Atlas Consolidated Mining | East West vs. Transpacific Broadband Group | East West vs. Philex Mining Corp |
| Semirara Mining vs. Philex Mining Corp | Semirara Mining vs. Integrated Micro Electronics | Semirara Mining vs. Atlas Consolidated Mining | Semirara Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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