Correlation Between Evergreen Steel and Camellia Metal

Can any of the company-specific risk be diversified away by investing in both Evergreen Steel and Camellia Metal 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 Steel and Camellia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evergreen Steel Corp and Camellia Metal Co, you can compare the effects of market volatilities on Evergreen Steel and Camellia Metal 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 Steel with a short position of Camellia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Steel and Camellia Metal.

Diversification Opportunities for Evergreen Steel and Camellia Metal

0.18

Correlation Coefficient

Evergreen Steel  Camellia Metal

Average diversification

The 3 months correlation between Evergreen and Camellia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Steel Corp and Camellia Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camellia Metal and Evergreen Steel 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 Steel Corp are associated (or correlated) with Camellia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camellia Metal has no effect on the direction of Evergreen Steel i.e., Evergreen Steel and Camellia Metal go up and down completely randomly.

Pair Corralation between Evergreen Steel and Camellia Metal

Assuming the 90 days trading horizon Evergreen Steel Corp is expected to under-perform the Camellia Metal. In addition to that, Evergreen Steel is 1.36 times more volatile than Camellia Metal Co. It trades about -0.11 of its total potential returns per unit of risk. Camellia Metal Co is currently generating about -0.03 per unit of volatility. If you would invest  1,570  in Camellia Metal Co on October 20, 2024 and sell it today you would lose (60.00) from holding Camellia Metal Co or give up 3.82% of portfolio value over 90 days.

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

Evergreen Steel Corp  vs.  Camellia Metal Co

Evergreen Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evergreen Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Camellia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Evergreen Steel and Camellia Metal

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

The idea behind Evergreen Steel Corp and Camellia Metal Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.