Correlation Between Eva Airways and Lion Travel
Can any of the company-specific risk be diversified away by investing in both Eva Airways and Lion Travel 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 Lion Travel 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 Lion Travel Service, you can compare the effects of market volatilities on Eva Airways and Lion Travel 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 Lion Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eva Airways and Lion Travel.
Diversification Opportunities for Eva Airways and Lion Travel
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eva and Lion is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eva Airways Corp and Lion Travel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Travel Service 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 Lion Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Travel Service has no effect on the direction of Eva Airways i.e., Eva Airways and Lion Travel go up and down completely randomly.
Pair Corralation between Eva Airways and Lion Travel
Assuming the 90 days trading horizon Eva Airways Corp is expected to generate 0.76 times more return on investment than Lion Travel. However, Eva Airways Corp is 1.31 times less risky than Lion Travel. It trades about 0.05 of its potential returns per unit of risk. Lion Travel Service is currently generating about 0.03 per unit of risk. If you would invest 2,775 in Eva Airways Corp on September 3, 2024 and sell it today you would earn a total of 1,380 from holding Eva Airways Corp or generate 49.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eva Airways Corp vs. Lion Travel Service
Performance |
| Timeline |
| Eva Airways Corp |
| Lion Travel Service |
Eva Airways and Lion Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eva Airways and Lion Travel
The main advantage of trading using opposite Eva Airways and Lion Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eva Airways position performs unexpectedly, Lion Travel 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 Lion Travel will offset losses from the drop in Lion Travel's long position.| Eva Airways vs. Universal Microelectronics Co | Eva Airways vs. AVerMedia Technologies | Eva Airways vs. Symtek Automation Asia | Eva Airways vs. WiseChip Semiconductor |
| Lion Travel vs. Tainan Spinning Co | Lion Travel vs. Chia Her Industrial | Lion Travel vs. WiseChip Semiconductor | Lion Travel vs. Novatek Microelectronics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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