Correlation Between Everjoy Health and Aba Chemicals

Can any of the company-specific risk be diversified away by investing in both Everjoy Health and Aba Chemicals 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 Everjoy Health and Aba Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everjoy Health Group and Aba Chemicals Corp, you can compare the effects of market volatilities on Everjoy Health and Aba Chemicals 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 Everjoy Health with a short position of Aba Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everjoy Health and Aba Chemicals.

Diversification Opportunities for Everjoy Health and Aba Chemicals

0.38

Correlation Coefficient

Everjoy Health  Aba Chemicals

Weak diversification

The 3 months correlation between Everjoy and Aba is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Everjoy Health Group and Aba Chemicals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aba Chemicals Corp and Everjoy Health 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 Everjoy Health Group are associated (or correlated) with Aba Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aba Chemicals Corp has no effect on the direction of Everjoy Health i.e., Everjoy Health and Aba Chemicals go up and down completely randomly.

Pair Corralation between Everjoy Health and Aba Chemicals

Assuming the 90 days trading horizon Everjoy Health Group is expected to generate 0.83 times more return on investment than Aba Chemicals. However, Everjoy Health Group is 1.21 times less risky than Aba Chemicals. It trades about 0.05 of its potential returns per unit of risk. Aba Chemicals Corp is currently generating about 0.02 per unit of risk. If you would invest  335.00  in Everjoy Health Group on October 12, 2024 and sell it today you would earn a total of  26.00  from holding Everjoy Health Group or generate 7.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Everjoy Health Group  vs.  Aba Chemicals Corp

Everjoy Health Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Everjoy Health Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Everjoy Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aba Chemicals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aba Chemicals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aba Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Everjoy Health and Aba Chemicals

The main advantage of trading using opposite Everjoy Health and Aba Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everjoy Health position performs unexpectedly, Aba Chemicals 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 Aba Chemicals will offset losses from the drop in Aba Chemicals' long position.

The idea behind Everjoy Health Group and Aba Chemicals Corp 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.