Correlation Between Evergreen Marine and Sesoda Corp
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Sesoda Corp 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 Marine and Sesoda Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Marine Corp and Sesoda Corp, you can compare the effects of market volatilities on Evergreen Marine and Sesoda Corp 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 Marine with a short position of Sesoda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Sesoda Corp.
Diversification Opportunities for Evergreen Marine and Sesoda Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evergreen and Sesoda is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Sesoda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sesoda Corp and Evergreen Marine 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 Marine Corp are associated (or correlated) with Sesoda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sesoda Corp has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Sesoda Corp go up and down completely randomly.
Pair Corralation between Evergreen Marine and Sesoda Corp
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 1.4 times more return on investment than Sesoda Corp. However, Evergreen Marine is 1.4 times more volatile than Sesoda Corp. It trades about 0.09 of its potential returns per unit of risk. Sesoda Corp is currently generating about 0.01 per unit of risk. If you would invest 8,500 in Evergreen Marine Corp on August 31, 2024 and sell it today you would earn a total of 13,200 from holding Evergreen Marine Corp or generate 155.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Sesoda Corp
Performance |
| Timeline |
| Evergreen Marine Corp |
| Sesoda Corp |
Evergreen Marine and Sesoda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Sesoda Corp
The main advantage of trading using opposite Evergreen Marine and Sesoda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Sesoda Corp 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 Sesoda Corp will offset losses from the drop in Sesoda Corp's long position.| Evergreen Marine vs. BES Engineering Co | Evergreen Marine vs. Continental Holdings Corp | Evergreen Marine vs. Kee Tai Properties | Evergreen Marine vs. Hung Sheng Construction |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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