Correlation Between TNEMAK and East West

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

By analyzing existing cross correlation between TNEMAK 3625 28 JUN 31 and East West Bancorp, you can compare the effects of market volatilities on TNEMAK 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 TNEMAK with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of TNEMAK and East West.

Diversification Opportunities for TNEMAK and East West

0.58

Correlation Coefficient

TNEMAK  East West

Very weak diversification

The 3 months correlation between TNEMAK and East is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TNEMAK 3625 28 JUN 31 and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp and TNEMAK 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 TNEMAK 3625 28 JUN 31 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 Bancorp has no effect on the direction of TNEMAK i.e., TNEMAK and East West go up and down completely randomly.

Pair Corralation between TNEMAK and East West

Assuming the 90 days trading horizon TNEMAK 3625 28 JUN 31 is expected to generate 0.65 times more return on investment than East West. However, TNEMAK 3625 28 JUN 31 is 1.53 times less risky than East West. It trades about 0.68 of its potential returns per unit of risk. East West Bancorp is currently generating about -0.26 per unit of risk. If you would invest  7,794  in TNEMAK 3625 28 JUN 31 on October 11, 2024 and sell it today you would earn a total of  154.00  from holding TNEMAK 3625 28 JUN 31 or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	14.29%
Values	Daily Returns

TNEMAK 3625 28 JUN 31  vs.  East West Bancorp

TNEMAK 3625 28

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TNEMAK 3625 28 JUN 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TNEMAK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

East West Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in East West Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, East West may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TNEMAK and East West

The main advantage of trading using opposite TNEMAK and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TNEMAK 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 TNEMAK 3625 28 JUN 31 and East West Bancorp 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.