Correlation Between Evergreen Marine and Baotek Industrial
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Baotek Industrial 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 Baotek Industrial 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 Baotek Industrial Materials, you can compare the effects of market volatilities on Evergreen Marine and Baotek Industrial 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 Baotek Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Baotek Industrial.
Diversification Opportunities for Evergreen Marine and Baotek Industrial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Evergreen and Baotek is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial 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 Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Baotek Industrial go up and down completely randomly.
Pair Corralation between Evergreen Marine and Baotek Industrial
Assuming the 90 days trading horizon Evergreen Marine is expected to generate 1.79 times less return on investment than Baotek Industrial. But when comparing it to its historical volatility, Evergreen Marine Corp is 1.71 times less risky than Baotek Industrial. It trades about 0.17 of its potential returns per unit of risk. Baotek Industrial Materials is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,650 in Baotek Industrial Materials on December 1, 2024 and sell it today you would earn a total of 430.00 from holding Baotek Industrial Materials or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Baotek Industrial Materials
Performance |
| Timeline |
| Evergreen Marine Corp |
| Baotek Industrial |
Evergreen Marine and Baotek Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Baotek Industrial
The main advantage of trading using opposite Evergreen Marine and Baotek Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Baotek Industrial 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 Baotek Industrial will offset losses from the drop in Baotek Industrial'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 |
| Baotek Industrial vs. Far Eastern New | Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Formosa Taffeta Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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