Correlation Between Top Frontier and EEI Corp
Can any of the company-specific risk be diversified away by investing in both Top Frontier and EEI Corp 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 Top Frontier and EEI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Frontier Investment and EEI Corp, you can compare the effects of market volatilities on Top Frontier and EEI Corp 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 Top Frontier with a short position of EEI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and EEI Corp.
Diversification Opportunities for Top Frontier and EEI Corp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Top and EEI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and EEI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EEI Corp and Top Frontier 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 Top Frontier Investment are associated (or correlated) with EEI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EEI Corp has no effect on the direction of Top Frontier i.e., Top Frontier and EEI Corp go up and down completely randomly.
Pair Corralation between Top Frontier and EEI Corp
Assuming the 90 days trading horizon Top Frontier Investment is expected to generate 1.22 times more return on investment than EEI Corp. However, Top Frontier is 1.22 times more volatile than EEI Corp. It trades about 0.0 of its potential returns per unit of risk. EEI Corp is currently generating about -0.15 per unit of risk. If you would invest 6,310 in Top Frontier Investment on November 3, 2024 and sell it today you would lose (100.00) from holding Top Frontier Investment or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Top Frontier Investment vs. EEI Corp
Performance |
| Timeline |
| Top Frontier Investment |
| EEI Corp |
Top Frontier and EEI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Frontier and EEI Corp
The main advantage of trading using opposite Top Frontier and EEI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier position performs unexpectedly, EEI Corp 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 EEI Corp will offset losses from the drop in EEI Corp's long position.| Top Frontier vs. Crown Asia Chemicals | Top Frontier vs. Metro Retail Stores | Top Frontier vs. Century Pacific Food | Top Frontier vs. Robinsons Retail Holdings |
| EEI Corp vs. Apex Mining Co | EEI Corp vs. House of Investments | EEI Corp vs. Rizal Commercial Banking | EEI Corp vs. Asia United Bank |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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