Correlation Between East West and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both East West and Grays Leasing 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 Grays Leasing 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 Grays Leasing, you can compare the effects of market volatilities on East West and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Grays Leasing.
Diversification Opportunities for East West and Grays Leasing
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between East and Grays is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of East West i.e., East West and Grays Leasing go up and down completely randomly.
Pair Corralation between East West and Grays Leasing
Assuming the 90 days trading horizon East West Insurance is expected to under-perform the Grays Leasing. But the stock apears to be less risky and, when comparing its historical volatility, East West Insurance is 2.12 times less risky than Grays Leasing. The stock trades about -0.16 of its potential returns per unit of risk. The Grays Leasing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Grays Leasing on September 2, 2024 and sell it today you would earn a total of 132.00 from holding Grays Leasing or generate 42.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.35% |
| Values | Daily Returns |
East West Insurance vs. Grays Leasing
Performance |
| Timeline |
| East West Insurance |
| Grays Leasing |
East West and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Grays Leasing
The main advantage of trading using opposite East West and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| East West vs. Habib Insurance | East West vs. Century Insurance | East West vs. Reliance Weaving Mills | East West vs. Media Times |
| Grays Leasing vs. MCB Investment Manag | Grays Leasing vs. 786 Investment Limited | Grays Leasing vs. Air Link Communication | Grays Leasing vs. JS Investments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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