Correlation Between Evergreen Marine and QST International

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

Diversification Opportunities for Evergreen Marine and QST International

-0.83

Correlation Coefficient

Evergreen Marine  QST International

Pay attention - limited upside

The 3 months correlation between Evergreen and QST is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and QST International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QST International 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 QST International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QST International has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and QST International go up and down completely randomly.

Pair Corralation between Evergreen Marine and QST International

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 2.89 times more return on investment than QST International. However, Evergreen Marine is 2.89 times more volatile than QST International. It trades about 0.12 of its potential returns per unit of risk. QST International is currently generating about -0.22 per unit of risk. If you would invest  19,500  in Evergreen Marine Corp on September 22, 2024 and sell it today you would earn a total of  3,550  from holding Evergreen Marine Corp or generate 18.21% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  QST International

Evergreen Marine Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 9 (%) 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.

QST International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QST International 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 QST International

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

The idea behind Evergreen Marine Corp and QST International 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 Stocks Directory module to find actively traded stocks across global markets.