Correlation Between Evergreen Marine and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Central Reinsurance 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 Central Reinsurance 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 Central Reinsurance Corp, you can compare the effects of market volatilities on Evergreen Marine and Central Reinsurance 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 Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Central Reinsurance.
Diversification Opportunities for Evergreen Marine and Central Reinsurance
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evergreen and Central is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Central Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Reinsurance 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 Central Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Reinsurance Corp has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Central Reinsurance go up and down completely randomly.
Pair Corralation between Evergreen Marine and Central Reinsurance
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 2.53 times more return on investment than Central Reinsurance. However, Evergreen Marine is 2.53 times more volatile than Central Reinsurance Corp. It trades about 0.11 of its potential returns per unit of risk. Central Reinsurance Corp is currently generating about -0.07 per unit of risk. If you would invest 20,550 in Evergreen Marine Corp on October 1, 2024 and sell it today you would earn a total of 2,050 from holding Evergreen Marine Corp or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Central Reinsurance Corp
Performance |
| Timeline |
| Evergreen Marine Corp |
| Central Reinsurance Corp |
Evergreen Marine and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Central Reinsurance
The main advantage of trading using opposite Evergreen Marine and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Central Reinsurance 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 Central Reinsurance will offset losses from the drop in Central Reinsurance'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 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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