Correlation Between East West and Escorts Investment
Can any of the company-specific risk be diversified away by investing in both East West and Escorts Investment 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 Escorts Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Insurance and Escorts Investment Bank, you can compare the effects of market volatilities on East West and Escorts Investment 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 Escorts Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Escorts Investment.
Diversification Opportunities for East West and Escorts Investment
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between East and Escorts is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Escorts Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escorts Investment Bank 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 Insurance are associated (or correlated) with Escorts Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escorts Investment Bank has no effect on the direction of East West i.e., East West and Escorts Investment go up and down completely randomly.
Pair Corralation between East West and Escorts Investment
Assuming the 90 days trading horizon East West Insurance is expected to under-perform the Escorts Investment. In addition to that, East West is 1.17 times more volatile than Escorts Investment Bank. It trades about -0.2 of its total potential returns per unit of risk. Escorts Investment Bank is currently generating about 0.01 per unit of volatility. If you would invest 447.00 in Escorts Investment Bank on August 27, 2024 and sell it today you would lose (83.00) from holding Escorts Investment Bank or give up 18.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 11.43% |
| Values | Daily Returns |
East West Insurance vs. Escorts Investment Bank
Performance |
| Timeline |
| East West Insurance |
| Escorts Investment Bank |
East West and Escorts Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Escorts Investment
The main advantage of trading using opposite East West and Escorts Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Escorts Investment 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 Escorts Investment will offset losses from the drop in Escorts Investment's long position.| East West vs. Habib Insurance | East West vs. Century Insurance | East West vs. Reliance Weaving Mills | East West vs. Media Times |
| Escorts Investment vs. Masood Textile Mills | Escorts Investment vs. Fauji Foods | Escorts Investment vs. KSB Pumps | Escorts Investment vs. Mari Petroleum |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |