Correlation Between East West and Hinopak Motors
Can any of the company-specific risk be diversified away by investing in both East West and Hinopak Motors 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 Hinopak Motors 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 Hinopak Motors, you can compare the effects of market volatilities on East West and Hinopak Motors 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 Hinopak Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Hinopak Motors.
Diversification Opportunities for East West and Hinopak Motors
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Hinopak is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Hinopak Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinopak Motors 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 Hinopak Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinopak Motors has no effect on the direction of East West i.e., East West and Hinopak Motors go up and down completely randomly.
Pair Corralation between East West and Hinopak Motors
Assuming the 90 days trading horizon East West Insurance is expected to under-perform the Hinopak Motors. In addition to that, East West is 1.34 times more volatile than Hinopak Motors. It trades about -0.03 of its total potential returns per unit of risk. Hinopak Motors is currently generating about 0.06 per unit of volatility. If you would invest 22,254 in Hinopak Motors on September 12, 2024 and sell it today you would earn a total of 19,795 from holding Hinopak Motors or generate 88.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.12% |
| Values | Daily Returns |
East West Insurance vs. Hinopak Motors
Performance |
| Timeline |
| East West Insurance |
| Hinopak Motors |
East West and Hinopak Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Hinopak Motors
The main advantage of trading using opposite East West and Hinopak Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Hinopak Motors 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 Hinopak Motors will offset losses from the drop in Hinopak Motors' long position.| East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Century Insurance | East West vs. Reliance Weaving Mills |
| Hinopak Motors vs. Mughal Iron Steel | Hinopak Motors vs. East West Insurance | Hinopak Motors vs. Adamjee Insurance | Hinopak Motors vs. Reliance Insurance Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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