Correlation Between East West and Prime Media

Can any of the company-specific risk be diversified away by investing in both East West and Prime Media 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 Prime Media 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 Prime Media Holdings, you can compare the effects of market volatilities on East West and Prime Media 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 Prime Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Prime Media.

Diversification Opportunities for East West and Prime Media

0.32

Correlation Coefficient

East West  Prime Media

Weak diversification

The 3 months correlation between East and Prime is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of East West i.e., East West and Prime Media go up and down completely randomly.

Pair Corralation between East West and Prime Media

Assuming the 90 days trading horizon East West Banking is expected to generate 0.23 times more return on investment than Prime Media. However, East West Banking is 4.39 times less risky than Prime Media. It trades about 0.03 of its potential returns per unit of risk. Prime Media Holdings is currently generating about -0.04 per unit of risk. If you would invest  970.00  in East West Banking on October 12, 2024 and sell it today you would earn a total of  15.00  from holding East West Banking or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.83%
Values	Daily Returns

East West Banking  vs.  Prime Media Holdings

East West Banking

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 2 (%) 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.

Prime Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with East West and Prime Media

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

The idea behind East West Banking and Prime Media Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.