Correlation Between Evergreen Marine and Microbio
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Microbio 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 Microbio 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 Microbio Co, you can compare the effects of market volatilities on Evergreen Marine and Microbio 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 Microbio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Microbio.
Diversification Opportunities for Evergreen Marine and Microbio
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Evergreen and Microbio is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Microbio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbio 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 Microbio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbio has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Microbio go up and down completely randomly.
Pair Corralation between Evergreen Marine and Microbio
Assuming the 90 days trading horizon Evergreen Marine is expected to generate 1.19 times less return on investment than Microbio. But when comparing it to its historical volatility, Evergreen Marine Corp is 4.39 times less risky than Microbio. It trades about 0.09 of its potential returns per unit of risk. Microbio Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,607 in Microbio Co on September 3, 2024 and sell it today you would lose (1,607) from holding Microbio Co or give up 28.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Microbio Co
Performance |
| Timeline |
| Evergreen Marine Corp |
| Microbio |
Evergreen Marine and Microbio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Microbio
The main advantage of trading using opposite Evergreen Marine and Microbio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Microbio 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 Microbio will offset losses from the drop in Microbio'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 |
| Microbio vs. Synmosa Biopharma | Microbio vs. Sinphar Pharmaceutical Co | Microbio vs. Taigen Biopharmaceuticals Holdings | Microbio vs. Abnova Taiwan Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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