Correlation Between Evergreen Marine and Kaori Heat

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

Diversification Opportunities for Evergreen Marine and Kaori Heat

-0.46

Correlation Coefficient

Evergreen Marine  Kaori Heat

Very good diversification

The 3 months correlation between Evergreen and Kaori is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Kaori Heat Treatment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaori Heat Treatment 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 Kaori Heat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaori Heat Treatment has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Kaori Heat go up and down completely randomly.

Pair Corralation between Evergreen Marine and Kaori Heat

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 0.71 times more return on investment than Kaori Heat. However, Evergreen Marine Corp is 1.42 times less risky than Kaori Heat. It trades about 0.09 of its potential returns per unit of risk. Kaori Heat Treatment is currently generating about -0.12 per unit of risk. If you would invest  20,600  in Evergreen Marine Corp on September 26, 2024 and sell it today you would earn a total of  2,600  from holding Evergreen Marine Corp or generate 12.62% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Kaori Heat Treatment

Evergreen Marine Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 7 (%) 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.

Kaori Heat Treatment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaori Heat Treatment 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 Kaori Heat

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

The idea behind Evergreen Marine Corp and Kaori Heat Treatment 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..