Correlation Between Evergreen Marine and Rafael Microelectronics

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

Diversification Opportunities for Evergreen Marine and Rafael Microelectronics

-0.56

Correlation Coefficient

Evergreen Marine  Rafael Microelectronics

Excellent diversification

The 3 months correlation between Evergreen and Rafael is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael 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 Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Rafael Microelectronics go up and down completely randomly.

Pair Corralation between Evergreen Marine and Rafael Microelectronics

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 1.12 times more return on investment than Rafael Microelectronics. However, Evergreen Marine is 1.12 times more volatile than Rafael Microelectronics. It trades about -0.09 of its potential returns per unit of risk. Rafael Microelectronics is currently generating about -0.28 per unit of risk. If you would invest  23,550  in Evergreen Marine Corp on October 9, 2024 and sell it today you would lose (600.00) from holding Evergreen Marine Corp or give up 2.55% of portfolio value over 90 days.

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

Evergreen Marine Corp  vs.  Rafael Microelectronics

Evergreen Marine Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine showed solid returns over the last few months and may actually be approaching a breakup point.

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evergreen Marine and Rafael Microelectronics

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

The idea behind Evergreen Marine Corp and Rafael Microelectronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.