Correlation Between Evergreen Marine and Eurocharm Holdings

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

Diversification Opportunities for Evergreen Marine and Eurocharm Holdings

-0.67

Correlation Coefficient

Evergreen Marine  Eurocharm Holdings

Excellent diversification

The 3 months correlation between Evergreen and Eurocharm is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Eurocharm Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurocharm Holdings 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 Eurocharm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurocharm Holdings has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Eurocharm Holdings go up and down completely randomly.

Pair Corralation between Evergreen Marine and Eurocharm Holdings

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 1.44 times more return on investment than Eurocharm Holdings. However, Evergreen Marine is 1.44 times more volatile than Eurocharm Holdings Co. It trades about 0.01 of its potential returns per unit of risk. Eurocharm Holdings Co is currently generating about -0.13 per unit of risk. If you would invest  20,400  in Evergreen Marine Corp on October 20, 2024 and sell it today you would lose (150.00) from holding Evergreen Marine Corp or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Evergreen Marine Corp  vs.  Eurocharm Holdings Co

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.

Eurocharm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurocharm Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Evergreen Marine and Eurocharm Holdings

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

The idea behind Evergreen Marine Corp and Eurocharm Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.