Correlation Between Evergreen Marine and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Amazing Microelectronic 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 Amazing Microelectronic 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 Amazing Microelectronic, you can compare the effects of market volatilities on Evergreen Marine and Amazing Microelectronic 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 Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Amazing Microelectronic.
Diversification Opportunities for Evergreen Marine and Amazing Microelectronic
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Evergreen and Amazing is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic 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 Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between Evergreen Marine and Amazing Microelectronic
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to under-perform the Amazing Microelectronic. In addition to that, Evergreen Marine is 1.38 times more volatile than Amazing Microelectronic. It trades about -0.27 of its total potential returns per unit of risk. Amazing Microelectronic is currently generating about -0.22 per unit of volatility. If you would invest 8,910 in Amazing Microelectronic on October 25, 2024 and sell it today you would lose (640.00) from holding Amazing Microelectronic or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Amazing Microelectronic
Performance |
| Timeline |
| Evergreen Marine Corp |
| Amazing Microelectronic |
Evergreen Marine and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Amazing Microelectronic
The main advantage of trading using opposite Evergreen Marine and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic'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 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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