Correlation Between Evergreen International and First Steamship
Can any of the company-specific risk be diversified away by investing in both Evergreen International and First Steamship 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 First Steamship 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 First Steamship Co, you can compare the effects of market volatilities on Evergreen International and First Steamship 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 First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and First Steamship.
Diversification Opportunities for Evergreen International and First Steamship
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Evergreen and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship 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 First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of Evergreen International i.e., Evergreen International and First Steamship go up and down completely randomly.
Pair Corralation between Evergreen International and First Steamship
Assuming the 90 days trading horizon Evergreen International Storage is expected to generate 1.15 times more return on investment than First Steamship. However, Evergreen International is 1.15 times more volatile than First Steamship Co. It trades about 0.03 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.01 per unit of risk. If you would invest 2,760 in Evergreen International Storage on August 29, 2024 and sell it today you would earn a total of 330.00 from holding Evergreen International Storage or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen International Storag vs. First Steamship Co
Performance |
| Timeline |
| Evergreen International |
| First Steamship |
Evergreen International and First Steamship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen International and First Steamship
The main advantage of trading using opposite Evergreen International and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen International position performs unexpectedly, First Steamship 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 First Steamship will offset losses from the drop in First Steamship's long position.| Evergreen International vs. Yulon Motor Co | Evergreen International vs. Far Eastern Department | Evergreen International vs. China Steel Corp | Evergreen International vs. Chang Hwa Commercial |
| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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