Correlation Between First Steamship and Evergreen International

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

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

Diversification Opportunities for First Steamship and Evergreen International

0.04

Correlation Coefficient

First Steamship  Evergreen International

Significant diversification

The 3 months correlation between First and Evergreen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International and First Steamship 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 First Steamship Co are associated (or correlated) with Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of First Steamship i.e., First Steamship and Evergreen International go up and down completely randomly.

Pair Corralation between First Steamship and Evergreen International

Assuming the 90 days trading horizon First Steamship Co is expected to generate 2.36 times more return on investment than Evergreen International. However, First Steamship is 2.36 times more volatile than Evergreen International Storage. It trades about 0.04 of its potential returns per unit of risk. Evergreen International Storage is currently generating about 0.02 per unit of risk. If you would invest  712.00  in First Steamship Co on September 13, 2024 and sell it today you would earn a total of  31.00  from holding First Steamship Co or generate 4.35% return on investment over 90 days.

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

First Steamship Co  vs.  Evergreen International Storag

First Steamship

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Steamship Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, First Steamship is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Evergreen International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen International Storage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Evergreen International 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 First Steamship and Evergreen International

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

The idea behind First Steamship Co and Evergreen International Storage 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.