Correlation Between Pacificonline Systems and East West

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

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

Diversification Opportunities for Pacificonline Systems and East West

0.45

Correlation Coefficient

Pacificonline Systems  East West

Very weak diversification

The 3 months correlation between Pacificonline and East is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems i.e., Pacificonline Systems and East West go up and down completely randomly.

Pair Corralation between Pacificonline Systems and East West

Assuming the 90 days trading horizon Pacificonline Systems is expected to generate 4.33 times more return on investment than East West. However, Pacificonline Systems is 4.33 times more volatile than East West Banking. It trades about 0.17 of its potential returns per unit of risk. East West Banking is currently generating about 0.11 per unit of risk. If you would invest  280.00  in Pacificonline Systems on November 29, 2024 and sell it today you would earn a total of  137.00  from holding Pacificonline Systems or generate 48.93% return on investment over 90 days.

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

Pacificonline Systems  vs.  East West Banking

Pacificonline Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacificonline Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pacificonline Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

East West Banking

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 8 (%) 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 March 2025.

Pair Trading with Pacificonline Systems and East West

The main advantage of trading using opposite Pacificonline Systems and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacificonline Systems 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 Pacificonline Systems 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 Stocks Directory module to find actively traded stocks across global markets.