Correlation Between Evergreen Marine and DingZing Advanced

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

Diversification Opportunities for Evergreen Marine and DingZing Advanced

-0.56

Correlation Coefficient

Evergreen Marine  DingZing Advanced

Excellent diversification

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

Pair Corralation between Evergreen Marine and DingZing Advanced

Assuming the 90 days trading horizon Evergreen Marine is expected to generate 5.89 times less return on investment than DingZing Advanced. But when comparing it to its historical volatility, Evergreen Marine Corp is 1.35 times less risky than DingZing Advanced. It trades about 0.02 of its potential returns per unit of risk. DingZing Advanced Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,700  in DingZing Advanced Materials on September 27, 2024 and sell it today you would earn a total of  800.00  from holding DingZing Advanced Materials or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Evergreen Marine Corp  vs.  DingZing Advanced Materials

Evergreen Marine Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DingZing Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DingZing Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Evergreen Marine and DingZing Advanced

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

The idea behind Evergreen Marine Corp and DingZing Advanced Materials 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.