Correlation Between Philex Mining and East West

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

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

Diversification Opportunities for Philex Mining and East West

0.43

Correlation Coefficient

Philex Mining  East West

Very weak diversification

The 3 months correlation between Philex and East is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp 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 Philex Mining 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 Philex Mining Corp 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 Philex Mining i.e., Philex Mining and East West go up and down completely randomly.

Pair Corralation between Philex Mining and East West

Assuming the 90 days trading horizon Philex Mining is expected to generate 11.02 times less return on investment than East West. In addition to that, Philex Mining is 1.75 times more volatile than East West Banking. It trades about 0.01 of its total potential returns per unit of risk. East West Banking is currently generating about 0.15 per unit of volatility. If you would invest  900.00  in East West Banking on September 18, 2024 and sell it today you would earn a total of  110.00  from holding East West Banking or generate 12.22% return on investment over 90 days.

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

Philex Mining Corp  vs.  East West Banking

Philex Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philex Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Philex Mining 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

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 12 (%) 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 Philex Mining and East West

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

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.