Correlation Between Evergreen Steel and Yeong Guan
Can any of the company-specific risk be diversified away by investing in both Evergreen Steel and Yeong Guan 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 Evergreen Steel and Yeong Guan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Steel Corp and Yeong Guan Energy, you can compare the effects of market volatilities on Evergreen Steel and Yeong Guan 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 Evergreen Steel with a short position of Yeong Guan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Steel and Yeong Guan.
Diversification Opportunities for Evergreen Steel and Yeong Guan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evergreen and Yeong is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Steel Corp and Yeong Guan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeong Guan Energy and Evergreen Steel 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 Evergreen Steel Corp are associated (or correlated) with Yeong Guan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeong Guan Energy has no effect on the direction of Evergreen Steel i.e., Evergreen Steel and Yeong Guan go up and down completely randomly.
Pair Corralation between Evergreen Steel and Yeong Guan
Assuming the 90 days trading horizon Evergreen Steel Corp is expected to generate 1.18 times more return on investment than Yeong Guan. However, Evergreen Steel is 1.18 times more volatile than Yeong Guan Energy. It trades about 0.07 of its potential returns per unit of risk. Yeong Guan Energy is currently generating about -0.08 per unit of risk. If you would invest 6,250 in Evergreen Steel Corp on August 27, 2024 and sell it today you would earn a total of 4,050 from holding Evergreen Steel Corp or generate 64.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Steel Corp vs. Yeong Guan Energy
Performance |
| Timeline |
| Evergreen Steel Corp |
| Yeong Guan Energy |
Evergreen Steel and Yeong Guan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Steel and Yeong Guan
The main advantage of trading using opposite Evergreen Steel and Yeong Guan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Steel position performs unexpectedly, Yeong Guan 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 Yeong Guan will offset losses from the drop in Yeong Guan's long position.| Evergreen Steel vs. Yang Ming Marine | Evergreen Steel vs. Wan Hai Lines | Evergreen Steel vs. Hsin Kuang Steel | Evergreen Steel vs. Evergreen Marine Corp |
| Yeong Guan vs. TECO Electric Machinery | Yeong Guan vs. Swancor Holding Co | Yeong Guan vs. Airtac International Group | Yeong Guan vs. Grape King Bio |
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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