Correlation Between East West and Atlas Consolidated

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

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

Diversification Opportunities for East West and Atlas Consolidated

0.37

Correlation Coefficient

East West  Atlas Consolidated

Weak diversification

The 3 months correlation between East and Atlas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining and East West 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 West Banking are associated (or correlated) with Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of East West i.e., East West and Atlas Consolidated go up and down completely randomly.

Pair Corralation between East West and Atlas Consolidated

Assuming the 90 days trading horizon East West Banking is expected to generate 0.62 times more return on investment than Atlas Consolidated. However, East West Banking is 1.62 times less risky than Atlas Consolidated. It trades about 0.03 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about -0.03 per unit of risk. If you would invest  950.00  in East West Banking on September 29, 2024 and sell it today you would earn a total of  35.00  from holding East West Banking or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

East West Banking  vs.  Atlas Consolidated Mining

East West Banking

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, East West is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Atlas Consolidated Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with East West and Atlas Consolidated

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

The idea behind East West Banking and Atlas Consolidated Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.