Correlation Between East West and Quice Food
Can any of the company-specific risk be diversified away by investing in both East West and Quice Food 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 Quice Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Insurance and Quice Food Industries, you can compare the effects of market volatilities on East West and Quice Food 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 Quice Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Quice Food.
Diversification Opportunities for East West and Quice Food
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between East and Quice is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Quice Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quice Food Industries 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 Insurance are associated (or correlated) with Quice Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quice Food Industries has no effect on the direction of East West i.e., East West and Quice Food go up and down completely randomly.
Pair Corralation between East West and Quice Food
Assuming the 90 days trading horizon East West is expected to generate 2.6 times less return on investment than Quice Food. But when comparing it to its historical volatility, East West Insurance is 1.34 times less risky than Quice Food. It trades about 0.05 of its potential returns per unit of risk. Quice Food Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 448.00 in Quice Food Industries on September 14, 2024 and sell it today you would earn a total of 250.00 from holding Quice Food Industries or generate 55.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 49.59% |
Values | Daily Returns |
East West Insurance vs. Quice Food Industries
Performance |
Timeline |
East West Insurance |
Quice Food Industries |
East West and Quice Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with East West and Quice Food
The main advantage of trading using opposite East West and Quice Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Quice Food 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 Quice Food will offset losses from the drop in Quice Food's long position.East West vs. Habib Insurance | East West vs. Ghandhara Automobile | East West vs. Century Insurance | East West vs. Reliance Weaving Mills |
Quice Food vs. Masood Textile Mills | Quice Food vs. Fauji Foods | Quice Food vs. KSB Pumps | Quice Food vs. Mari Petroleum |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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