Correlation Between Top Frontier and East West
Can any of the company-specific risk be diversified away by investing in both Top Frontier 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 Top Frontier and East West 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 East West Banking, you can compare the effects of market volatilities on Top Frontier 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 Top Frontier with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and East West.
Diversification Opportunities for Top Frontier and East West
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Top and East is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and East West Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Banking 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 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 Banking has no effect on the direction of Top Frontier i.e., Top Frontier and East West go up and down completely randomly.
Pair Corralation between Top Frontier and East West
Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the East West. But the stock apears to be less risky and, when comparing its historical volatility, Top Frontier Investment is 1.87 times less risky than East West. The stock trades about -0.23 of its potential returns per unit of risk. The East West Banking is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 990.00 in East West Banking on November 29, 2024 and sell it today you would earn a total of 66.00 from holding East West Banking or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Top Frontier Investment vs. East West Banking
Performance |
| Timeline |
| Top Frontier Investment |
| East West Banking |
Top Frontier and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Frontier and East West
The main advantage of trading using opposite Top Frontier and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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.| Top Frontier vs. Figaro Coffee Group | Top Frontier vs. Apex Mining Co | Top Frontier vs. Integrated Micro Electronics | Top Frontier vs. Lepanto Consolidated Mining |
| East West vs. BDO Unibank | East West vs. Allhome Corp | East West vs. Suntrust Home Developers | East West vs. Converge Information Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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