Correlation Between Benguet Corp and East West

Can any of the company-specific risk be diversified away by investing in both Benguet Corp 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 Benguet Corp and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benguet Corp A and East West Banking, you can compare the effects of market volatilities on Benguet Corp 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 Benguet Corp with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benguet Corp and East West.

Diversification Opportunities for Benguet Corp and East West

0.31

Correlation Coefficient

Benguet Corp  East West

Weak diversification

The 3 months correlation between Benguet and East is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Benguet Corp A 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 Benguet Corp 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 Benguet Corp A 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 Benguet Corp i.e., Benguet Corp and East West go up and down completely randomly.

Pair Corralation between Benguet Corp and East West

Assuming the 90 days trading horizon Benguet Corp is expected to generate 1.98 times less return on investment than East West. In addition to that, Benguet Corp is 2.63 times more volatile than East West Banking. It trades about 0.03 of its total potential returns per unit of risk. East West Banking is currently generating about 0.14 per unit of volatility. If you would invest  892.00  in East West Banking on September 16, 2024 and sell it today you would earn a total of  98.00  from holding East West Banking or generate 10.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.77%
Values	Daily Returns

Benguet Corp A  vs.  East West Banking

Benguet Corp A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Benguet Corp A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Benguet Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

East West Banking

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, East West may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Benguet Corp and East West

The main advantage of trading using opposite Benguet Corp and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benguet Corp 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.

The idea behind Benguet Corp A and East West Banking pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.