Correlation Between Evergreen International and Kerry TJ
Can any of the company-specific risk be diversified away by investing in both Evergreen International and Kerry TJ 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 Kerry TJ 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 Kerry TJ Logistics, you can compare the effects of market volatilities on Evergreen International and Kerry TJ 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 Kerry TJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and Kerry TJ.
Diversification Opportunities for Evergreen International and Kerry TJ
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Evergreen and Kerry is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Kerry TJ Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry TJ Logistics 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 Kerry TJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry TJ Logistics has no effect on the direction of Evergreen International i.e., Evergreen International and Kerry TJ go up and down completely randomly.
Pair Corralation between Evergreen International and Kerry TJ
Assuming the 90 days trading horizon Evergreen International Storage is expected to under-perform the Kerry TJ. In addition to that, Evergreen International is 1.61 times more volatile than Kerry TJ Logistics. It trades about -0.3 of its total potential returns per unit of risk. Kerry TJ Logistics is currently generating about -0.03 per unit of volatility. If you would invest 3,890 in Kerry TJ Logistics on November 5, 2024 and sell it today you would lose (10.00) from holding Kerry TJ Logistics or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen International Storag vs. Kerry TJ Logistics
Performance |
| Timeline |
| Evergreen International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kerry TJ Logistics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Evergreen International and Kerry TJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen International and Kerry TJ
The main advantage of trading using opposite Evergreen International and Kerry TJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen International position performs unexpectedly, Kerry TJ 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 Kerry TJ will offset losses from the drop in Kerry TJ's long position.The idea behind Evergreen International Storage and Kerry TJ Logistics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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