Correlation Between Evergreen Marine and Cheng Loong
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Cheng Loong 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 Cheng Loong 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 Cheng Loong Corp, you can compare the effects of market volatilities on Evergreen Marine and Cheng Loong 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 Cheng Loong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Cheng Loong.
Diversification Opportunities for Evergreen Marine and Cheng Loong
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evergreen and Cheng is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Cheng Loong Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Loong 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 Cheng Loong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Loong Corp has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Cheng Loong go up and down completely randomly.
Pair Corralation between Evergreen Marine and Cheng Loong
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 2.3 times more return on investment than Cheng Loong. However, Evergreen Marine is 2.3 times more volatile than Cheng Loong Corp. It trades about 0.07 of its potential returns per unit of risk. Cheng Loong Corp is currently generating about -0.43 per unit of risk. If you would invest 21,050 in Evergreen Marine Corp on September 3, 2024 and sell it today you would earn a total of 650.00 from holding Evergreen Marine Corp or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Cheng Loong Corp
Performance |
| Timeline |
| Evergreen Marine Corp |
| Cheng Loong Corp |
Evergreen Marine and Cheng Loong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Cheng Loong
The main advantage of trading using opposite Evergreen Marine and Cheng Loong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Cheng Loong 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 Cheng Loong will offset losses from the drop in Cheng Loong's long position.| Evergreen Marine vs. Yang Ming Marine | Evergreen Marine vs. Wan Hai Lines | Evergreen Marine vs. Eva Airways Corp | Evergreen Marine vs. China Airlines |
| Cheng Loong vs. YFY Inc | Cheng Loong vs. Long Chen Paper | Cheng Loong vs. Chung Hwa Pulp | Cheng Loong vs. Nan Ya Plastics |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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