Correlation Between Eva Airways and Long Bon
Can any of the company-specific risk be diversified away by investing in both Eva Airways and Long Bon 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 Eva Airways and Long Bon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eva Airways Corp and Long Bon International, you can compare the effects of market volatilities on Eva Airways and Long Bon 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 Eva Airways with a short position of Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eva Airways and Long Bon.
Diversification Opportunities for Eva Airways and Long Bon
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eva and Long is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eva Airways Corp and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International and Eva Airways 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 Eva Airways Corp are associated (or correlated) with Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Eva Airways i.e., Eva Airways and Long Bon go up and down completely randomly.
Pair Corralation between Eva Airways and Long Bon
Assuming the 90 days trading horizon Eva Airways Corp is expected to generate 2.26 times more return on investment than Long Bon. However, Eva Airways is 2.26 times more volatile than Long Bon International. It trades about 0.16 of its potential returns per unit of risk. Long Bon International is currently generating about -0.34 per unit of risk. If you would invest 4,150 in Eva Airways Corp on September 23, 2024 and sell it today you would earn a total of 310.00 from holding Eva Airways Corp or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eva Airways Corp vs. Long Bon International
Performance |
| Timeline |
| Eva Airways Corp |
| Long Bon International |
Eva Airways and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eva Airways and Long Bon
The main advantage of trading using opposite Eva Airways and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eva Airways position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.| Eva Airways vs. Yang Ming Marine | Eva Airways vs. Evergreen Marine Corp | Eva Airways vs. U Ming Marine Transport |
| Long Bon vs. Hung Sheng Construction | Long Bon vs. Chainqui Construction Development | Long Bon vs. BES Engineering Co | Long Bon vs. Sincere Navigation 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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