Correlation Between East West and United Insurance
Can any of the company-specific risk be diversified away by investing in both East West and United Insurance 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 United Insurance 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 United Insurance, you can compare the effects of market volatilities on East West and United Insurance 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and United Insurance.
Diversification Opportunities for East West and United Insurance
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between East and United is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of East West i.e., East West and United Insurance go up and down completely randomly.
Pair Corralation between East West and United Insurance
If you would invest 3,771 in East West Insurance on August 25, 2024 and sell it today you would earn a total of 0.00 from holding East West Insurance or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
East West Insurance vs. United Insurance
Performance |
| Timeline |
| East West Insurance |
| United Insurance |
East West and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and United Insurance
The main advantage of trading using opposite East West and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Century Insurance | East West vs. Reliance Weaving Mills |
| United Insurance vs. Bank of Punjab | United Insurance vs. JS Global Banking | United Insurance vs. Air Link Communication | United Insurance vs. Atlas Insurance |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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