Correlation Between Evergreen Marine and Ardentec

Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Ardentec 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 Ardentec 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 Ardentec, you can compare the effects of market volatilities on Evergreen Marine and Ardentec 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 Ardentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Ardentec.

Diversification Opportunities for Evergreen Marine and Ardentec

-0.64

Correlation Coefficient

Evergreen Marine  Ardentec

Excellent diversification

The 3 months correlation between Evergreen and Ardentec is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Ardentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardentec 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 Ardentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardentec has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Ardentec go up and down completely randomly.

Pair Corralation between Evergreen Marine and Ardentec

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to under-perform the Ardentec. But the stock apears to be less risky and, when comparing its historical volatility, Evergreen Marine Corp is 1.53 times less risky than Ardentec. The stock trades about -0.27 of its potential returns per unit of risk. The Ardentec is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,520  in Ardentec on October 24, 2024 and sell it today you would earn a total of  750.00  from holding Ardentec or generate 13.59% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Ardentec

Evergreen Marine Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ardentec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ardentec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ardentec may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Evergreen Marine and Ardentec

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

The idea behind Evergreen Marine Corp and Ardentec 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.