Correlation Between China Metal and Evergreen International
Can any of the company-specific risk be diversified away by investing in both China Metal and Evergreen International 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 China Metal and Evergreen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Evergreen International Storage, you can compare the effects of market volatilities on China Metal and Evergreen International 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 China Metal with a short position of Evergreen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Evergreen International.
Diversification Opportunities for China Metal and Evergreen International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Evergreen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International and China Metal 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 China Metal Products are associated (or correlated) with Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of China Metal i.e., China Metal and Evergreen International go up and down completely randomly.
Pair Corralation between China Metal and Evergreen International
Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Evergreen International. In addition to that, China Metal is 1.05 times more volatile than Evergreen International Storage. It trades about 0.0 of its total potential returns per unit of risk. Evergreen International Storage is currently generating about 0.02 per unit of volatility. If you would invest 2,910 in Evergreen International Storage on August 28, 2024 and sell it today you would earn a total of 265.00 from holding Evergreen International Storage or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Evergreen International Storag
Performance |
| Timeline |
| China Metal Products |
| Evergreen International |
China Metal and Evergreen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Evergreen International
The main advantage of trading using opposite China Metal and Evergreen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Evergreen International 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 Evergreen International will offset losses from the drop in Evergreen International's long position.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| Evergreen International vs. Sincere Navigation Corp | Evergreen International vs. First Steamship Co | Evergreen International vs. Far Eastern Department | Evergreen International vs. China Container Terminal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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