Correlation Between BES Engineering and Evergreen Marine
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Evergreen Marine 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 BES Engineering and Evergreen Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Evergreen Marine Corp, you can compare the effects of market volatilities on BES Engineering and Evergreen Marine 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 BES Engineering with a short position of Evergreen Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Evergreen Marine.
Diversification Opportunities for BES Engineering and Evergreen Marine
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BES and Evergreen is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine Corp and BES Engineering 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 BES Engineering Co are associated (or correlated) with Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of BES Engineering i.e., BES Engineering and Evergreen Marine go up and down completely randomly.
Pair Corralation between BES Engineering and Evergreen Marine
Assuming the 90 days trading horizon BES Engineering is expected to generate 2.34 times less return on investment than Evergreen Marine. But when comparing it to its historical volatility, BES Engineering Co is 1.4 times less risky than Evergreen Marine. It trades about 0.07 of its potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 20,550 in Evergreen Marine Corp on August 31, 2024 and sell it today you would earn a total of 1,150 from holding Evergreen Marine Corp or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Evergreen Marine Corp
Performance |
| Timeline |
| BES Engineering |
| Evergreen Marine Corp |
BES Engineering and Evergreen Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Evergreen Marine
The main advantage of trading using opposite BES Engineering and Evergreen Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Evergreen Marine 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 Marine will offset losses from the drop in Evergreen Marine's long position.| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
| Evergreen Marine vs. BES Engineering Co | Evergreen Marine vs. Continental Holdings Corp | Evergreen Marine vs. Kee Tai Properties | Evergreen Marine vs. Hung Sheng Construction |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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