Correlation Between East Side and Westshore Terminals

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

By analyzing existing cross correlation between East Side Games and Westshore Terminals Investment, you can compare the effects of market volatilities on East Side and Westshore Terminals 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 Side with a short position of Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Westshore Terminals.

Diversification Opportunities for East Side and Westshore Terminals

0.3

Correlation Coefficient

East Side  Westshore Terminals

Weak diversification

The 3 months correlation between East and Westshore is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals and East Side 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 Side Games are associated (or correlated) with Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of East Side i.e., East Side and Westshore Terminals go up and down completely randomly.

Pair Corralation between East Side and Westshore Terminals

Assuming the 90 days trading horizon East Side Games is expected to generate 3.23 times more return on investment than Westshore Terminals. However, East Side is 3.23 times more volatile than Westshore Terminals Investment. It trades about 0.02 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.02 per unit of risk. If you would invest  71.00  in East Side Games on September 21, 2024 and sell it today you would lose (13.00) from holding East Side Games or give up 18.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

East Side Games  vs.  Westshore Terminals Investment

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Westshore Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westshore Terminals Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with East Side and Westshore Terminals

The main advantage of trading using opposite East Side and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.

The idea behind East Side Games and Westshore Terminals Investment 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.