Correlation Between Evergreen Marine and United Integrated

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

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

Diversification Opportunities for Evergreen Marine and United Integrated

0.79

Correlation Coefficient

Evergreen Marine  United Integrated

Poor diversification

The 3 months correlation between Evergreen and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and United Integrated Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Integrated and Evergreen Marine 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 Marine Corp are associated (or correlated) with United Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Integrated has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and United Integrated go up and down completely randomly.

Pair Corralation between Evergreen Marine and United Integrated

Assuming the 90 days trading horizon Evergreen Marine is expected to generate 2.01 times less return on investment than United Integrated. In addition to that, Evergreen Marine is 1.3 times more volatile than United Integrated Services. It trades about 0.12 of its total potential returns per unit of risk. United Integrated Services is currently generating about 0.31 per unit of volatility. If you would invest  32,050  in United Integrated Services on September 23, 2024 and sell it today you would earn a total of  14,050  from holding United Integrated Services or generate 43.84% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  United Integrated Services

Evergreen Marine Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine showed solid returns over the last few months and may actually be approaching a breakup point.

United Integrated

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Integrated Services are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evergreen Marine and United Integrated

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

The idea behind Evergreen Marine Corp and United Integrated Services 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.