Correlation Between Evergreen Marine and GlobalWafers

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

Diversification Opportunities for Evergreen Marine and GlobalWafers

0.77

Correlation Coefficient

Evergreen Marine  GlobalWafers

Poor diversification

The 3 months correlation between Evergreen and GlobalWafers is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers 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 GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and GlobalWafers go up and down completely randomly.

Pair Corralation between Evergreen Marine and GlobalWafers

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to under-perform the GlobalWafers. In addition to that, Evergreen Marine is 1.03 times more volatile than GlobalWafers Co. It trades about -0.05 of its total potential returns per unit of risk. GlobalWafers Co is currently generating about 0.02 per unit of volatility. If you would invest  37,584  in GlobalWafers Co on December 2, 2024 and sell it today you would earn a total of  216.00  from holding GlobalWafers Co or generate 0.57% 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.  GlobalWafers Co

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.

GlobalWafers

Risk-Adjusted Performance

Very Weak

Over the last 90 days GlobalWafers 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 GlobalWafers

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

The idea behind Evergreen Marine Corp and GlobalWafers 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.