Correlation Between Evergreen Marine and Kingcan Holdings
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Kingcan Holdings 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 Kingcan Holdings 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 Kingcan Holdings, you can compare the effects of market volatilities on Evergreen Marine and Kingcan Holdings 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 Kingcan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Kingcan Holdings.
Diversification Opportunities for Evergreen Marine and Kingcan Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evergreen and Kingcan is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Kingcan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingcan Holdings 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 Kingcan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingcan Holdings has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Kingcan Holdings go up and down completely randomly.
Pair Corralation between Evergreen Marine and Kingcan Holdings
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 2.59 times more return on investment than Kingcan Holdings. However, Evergreen Marine is 2.59 times more volatile than Kingcan Holdings. It trades about 0.09 of its potential returns per unit of risk. Kingcan Holdings is currently generating about 0.01 per unit of risk. If you would invest 8,500 in Evergreen Marine Corp on September 3, 2024 and sell it today you would earn a total of 13,200 from holding Evergreen Marine Corp or generate 155.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Kingcan Holdings
Performance |
| Timeline |
| Evergreen Marine Corp |
| Kingcan Holdings |
Evergreen Marine and Kingcan Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Kingcan Holdings
The main advantage of trading using opposite Evergreen Marine and Kingcan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine position performs unexpectedly, Kingcan Holdings 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 Kingcan Holdings will offset losses from the drop in Kingcan Holdings' 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 |
| Kingcan Holdings vs. Jinli Group Holdings | Kingcan Holdings vs. Shinih Enterprise Co | Kingcan Holdings vs. Super Dragon Technology | Kingcan Holdings vs. Shui Mu International 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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