Correlation Between Evergreen International and Transcend Information
Can any of the company-specific risk be diversified away by investing in both Evergreen International and Transcend Information 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 International and Transcend Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen International Storage and Transcend Information, you can compare the effects of market volatilities on Evergreen International and Transcend Information 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 International with a short position of Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and Transcend Information.
Diversification Opportunities for Evergreen International and Transcend Information
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evergreen and Transcend is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information and Evergreen International 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 International Storage are associated (or correlated) with Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Evergreen International i.e., Evergreen International and Transcend Information go up and down completely randomly.
Pair Corralation between Evergreen International and Transcend Information
Assuming the 90 days trading horizon Evergreen International is expected to generate 2.05 times less return on investment than Transcend Information. In addition to that, Evergreen International is 1.11 times more volatile than Transcend Information. It trades about 0.02 of its total potential returns per unit of risk. Transcend Information is currently generating about 0.05 per unit of volatility. If you would invest 7,310 in Transcend Information on August 28, 2024 and sell it today you would earn a total of 2,050 from holding Transcend Information or generate 28.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen International Storag vs. Transcend Information
Performance |
| Timeline |
| Evergreen International |
| Transcend Information |
Evergreen International and Transcend Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen International and Transcend Information
The main advantage of trading using opposite Evergreen International and Transcend Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen International position performs unexpectedly, Transcend Information 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 Transcend Information will offset losses from the drop in Transcend Information's long position.| Evergreen International vs. Sincere Navigation Corp | Evergreen International vs. First Steamship Co | Evergreen International vs. Far Eastern Department | Evergreen International vs. China Container Terminal |
| Transcend Information vs. Nanya Technology Corp | Transcend Information vs. Powertech Technology | Transcend Information vs. Chicony Electronics Co | Transcend Information vs. Realtek Semiconductor 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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