Correlation Between Evergreen Marine and Primax Electronics

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

Diversification Opportunities for Evergreen Marine and Primax Electronics

-0.44

Correlation Coefficient

Evergreen Marine  Primax Electronics

Very good diversification

The 3 months correlation between Evergreen and Primax is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Primax Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primax Electronics 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 Primax Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primax Electronics has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Primax Electronics go up and down completely randomly.

Pair Corralation between Evergreen Marine and Primax Electronics

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 1.11 times more return on investment than Primax Electronics. However, Evergreen Marine is 1.11 times more volatile than Primax Electronics. It trades about 0.04 of its potential returns per unit of risk. Primax Electronics is currently generating about 0.04 per unit of risk. If you would invest  18,000  in Evergreen Marine Corp on December 4, 2024 and sell it today you would earn a total of  3,800  from holding Evergreen Marine Corp or generate 21.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Evergreen Marine Corp  vs.  Primax Electronics

Evergreen Marine Corp

Risk-Adjusted Performance

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.

Primax Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Primax Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Primax Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Evergreen Marine and Primax Electronics

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

The idea behind Evergreen Marine Corp and Primax Electronics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.