Correlation Between East West and Top Frontier
Can any of the company-specific risk be diversified away by investing in both East West and Top Frontier 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 Top Frontier 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 Top Frontier Investment, you can compare the effects of market volatilities on East West and Top Frontier 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 Top Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Top Frontier.
Diversification Opportunities for East West and Top Frontier
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Top is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment 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 Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of East West i.e., East West and Top Frontier go up and down completely randomly.
Pair Corralation between East West and Top Frontier
Assuming the 90 days trading horizon East West Banking is expected to generate 0.7 times more return on investment than Top Frontier. However, East West Banking is 1.42 times less risky than Top Frontier. It trades about -0.11 of its potential returns per unit of risk. Top Frontier Investment is currently generating about -0.23 per unit of risk. If you would invest 1,038 in East West Banking on January 13, 2025 and sell it today you would lose (28.00) from holding East West Banking or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Banking vs. Top Frontier Investment
Performance |
| Timeline |
| East West Banking |
| Top Frontier Investment |
East West and Top Frontier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Top Frontier
The main advantage of trading using opposite East West and Top Frontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Top Frontier 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 Top Frontier will offset losses from the drop in Top Frontier's long position.| East West vs. Apex Mining Co | East West vs. Allhome Corp | East West vs. STI Education Systems | East West vs. Converge Information Communications |
| Top Frontier vs. Philex Mining Corp | Top Frontier vs. Converge Information Communications | Top Frontier vs. House of Investments | Top Frontier vs. National Reinsurance |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |