Correlation Between EV Advanced and CG Hi
Can any of the company-specific risk be diversified away by investing in both EV Advanced and CG Hi 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 EV Advanced and CG Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EV Advanced Material and CG Hi Tech, you can compare the effects of market volatilities on EV Advanced and CG Hi 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 EV Advanced with a short position of CG Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of EV Advanced and CG Hi.
Diversification Opportunities for EV Advanced and CG Hi
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 131400 and 264660 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and CG Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CG Hi Tech and EV Advanced 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 EV Advanced Material are associated (or correlated) with CG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CG Hi Tech has no effect on the direction of EV Advanced i.e., EV Advanced and CG Hi go up and down completely randomly.
Pair Corralation between EV Advanced and CG Hi
Assuming the 90 days trading horizon EV Advanced Material is expected to under-perform the CG Hi. But the stock apears to be less risky and, when comparing its historical volatility, EV Advanced Material is 3.13 times less risky than CG Hi. The stock trades about -0.25 of its potential returns per unit of risk. The CG Hi Tech is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 980,000 in CG Hi Tech on November 5, 2024 and sell it today you would earn a total of 173,000 from holding CG Hi Tech or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EV Advanced Material vs. CG Hi Tech
Performance |
| Timeline |
| EV Advanced Material |
| CG Hi Tech |
EV Advanced and CG Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EV Advanced and CG Hi
The main advantage of trading using opposite EV Advanced and CG Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EV Advanced position performs unexpectedly, CG Hi 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 CG Hi will offset losses from the drop in CG Hi's long position.| EV Advanced vs. Namhae Chemical | EV Advanced vs. Hanshin Construction Co | EV Advanced vs. Youngbo Chemical Co | EV Advanced vs. Youngchang Chemical Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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