Correlation Between East West and Organic Meat

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

Diversification Opportunities for East West and Organic Meat

0.3

Correlation Coefficient

East West  Organic Meat

Weak diversification

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

Pair Corralation between East West and Organic Meat

If you would invest  5,729  in East West Insurance on December 4, 2024 and sell it today you would earn a total of  0.00  from holding East West Insurance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	9.52%
Values	Daily Returns

East West Insurance  vs.  The Organic Meat

East West Insurance

Risk-Adjusted Performance

Market Crasher

Over the last 90 days East West Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, East West sustained solid returns over the last few months and may actually be approaching a breakup point.

Organic Meat

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Organic Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with East West and Organic Meat

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

The idea behind East West Insurance and The Organic Meat 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.