Correlation Between National Foods and East West
Can any of the company-specific risk be diversified away by investing in both National Foods and East West 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 National Foods and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Foods and East West Insurance, you can compare the effects of market volatilities on National Foods and East West 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 National Foods with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Foods and East West.
Diversification Opportunities for National Foods and East West
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and East is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Foods and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Insurance and National Foods 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 National Foods are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Insurance has no effect on the direction of National Foods i.e., National Foods and East West go up and down completely randomly.
Pair Corralation between National Foods and East West
If you would invest 5,729 in East West Insurance on November 7, 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 Together |
| Strength | Insignificant |
| Accuracy | 30.43% |
| Values | Daily Returns |
National Foods vs. East West Insurance
Performance |
| Timeline |
| National Foods |
| East West Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
National Foods and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Foods and East West
The main advantage of trading using opposite National Foods and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Foods position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| National Foods vs. IBL HealthCare | National Foods vs. Orient Rental Modaraba | National Foods vs. Air Link Communication | National Foods vs. Big Bird Foods |
| East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Shadab Textile Mills | East West vs. Century 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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