Correlation Between Evergreen Marine and Advanced International

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

Diversification Opportunities for Evergreen Marine and Advanced International

-0.81

Correlation Coefficient

Evergreen Marine  Advanced International

Pay attention - limited upside

The 3 months correlation between Evergreen and Advanced is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Advanced International Multite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced 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 Advanced International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced International has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Advanced International go up and down completely randomly.

Pair Corralation between Evergreen Marine and Advanced International

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 1.8 times more return on investment than Advanced International. However, Evergreen Marine is 1.8 times more volatile than Advanced International Multitech. It trades about 0.09 of its potential returns per unit of risk. Advanced International Multitech is currently generating about -0.04 per unit of risk. If you would invest  9,158  in Evergreen Marine Corp on October 5, 2024 and sell it today you would earn a total of  13,542  from holding Evergreen Marine Corp or generate 147.87% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Advanced International Multite

Evergreen Marine Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 12 (%) 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.

Advanced International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced International Multitech 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 Advanced International

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

The idea behind Evergreen Marine Corp and Advanced International Multitech 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.