Correlation Between Evergreen Marine and Sigurd Microelectronics

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

Diversification Opportunities for Evergreen Marine and Sigurd Microelectronics

0.1

Correlation Coefficient

Evergreen Marine  Sigurd Microelectronics

Average diversification

The 3 months correlation between Evergreen and Sigurd is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Sigurd Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigurd Microelectronics 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 Sigurd Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigurd Microelectronics has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Sigurd Microelectronics go up and down completely randomly.

Pair Corralation between Evergreen Marine and Sigurd Microelectronics

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to under-perform the Sigurd Microelectronics. In addition to that, Evergreen Marine is 1.33 times more volatile than Sigurd Microelectronics Corp. It trades about -0.04 of its total potential returns per unit of risk. Sigurd Microelectronics Corp is currently generating about 0.17 per unit of volatility. If you would invest  6,950  in Sigurd Microelectronics Corp on December 4, 2024 and sell it today you would earn a total of  990.00  from holding Sigurd Microelectronics Corp or generate 14.24% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Sigurd Microelectronics Corp

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.

Sigurd Microelectronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sigurd Microelectronics Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sigurd Microelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evergreen Marine and Sigurd Microelectronics

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

The idea behind Evergreen Marine Corp and Sigurd Microelectronics Corp 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.