Correlation Between East West and MCB Investment
Can any of the company-specific risk be diversified away by investing in both East West and MCB 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 MCB 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 MCB Investment Manag, you can compare the effects of market volatilities on East West and MCB 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 MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and MCB Investment.
Diversification Opportunities for East West and MCB Investment
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and MCB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag 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 MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of East West i.e., East West and MCB Investment go up and down completely randomly.
Pair Corralation between East West and MCB Investment
Assuming the 90 days trading horizon East West is expected to generate 6.25 times less return on investment than MCB Investment. But when comparing it to its historical volatility, East West Insurance is 4.25 times less risky than MCB Investment. It trades about 0.3 of its potential returns per unit of risk. MCB Investment Manag is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 3,950 in MCB Investment Manag on August 30, 2024 and sell it today you would earn a total of 1,670 from holding MCB Investment Manag or generate 42.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.91% |
| Values | Daily Returns |
East West Insurance vs. MCB Investment Manag
Performance |
| Timeline |
| East West Insurance |
| MCB Investment Manag |
East West and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and MCB Investment
The main advantage of trading using opposite East West and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, MCB 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 MCB Investment will offset losses from the drop in MCB 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 |
| MCB Investment vs. Habib Insurance | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills | MCB Investment vs. Media Times |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |