Correlation Between Evergreen Marine and C Media
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and C Media 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 C Media 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 C Media Electronics, you can compare the effects of market volatilities on Evergreen Marine and C Media 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 C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and C Media.
Diversification Opportunities for Evergreen Marine and C Media
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evergreen and 6237 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics 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 C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and C Media go up and down completely randomly.
Pair Corralation between Evergreen Marine and C Media
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to under-perform the C Media. But the stock apears to be less risky and, when comparing its historical volatility, Evergreen Marine Corp is 1.9 times less risky than C Media. The stock trades about -0.33 of its potential returns per unit of risk. The C Media Electronics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,990 in C Media Electronics on November 4, 2024 and sell it today you would earn a total of 640.00 from holding C Media Electronics or generate 12.83% 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. C Media Electronics
Performance |
| Timeline |
| Evergreen Marine Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| C Media Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Evergreen Marine and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and C Media
The main advantage of trading using opposite Evergreen Marine and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.The idea behind Evergreen Marine Corp and C Media Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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