Correlation Between Evergreen International and Wan Hai

Can any of the company-specific risk be diversified away by investing in both Evergreen International and Wan Hai 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 International and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evergreen International Storage and Wan Hai Lines, you can compare the effects of market volatilities on Evergreen International and Wan Hai 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 International with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and Wan Hai.

Diversification Opportunities for Evergreen International and Wan Hai

0.5

Correlation Coefficient

Evergreen International  Wan Hai

Very weak diversification

The 3 months correlation between Evergreen and Wan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and Evergreen International 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 International Storage are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Evergreen International i.e., Evergreen International and Wan Hai go up and down completely randomly.

Pair Corralation between Evergreen International and Wan Hai

Assuming the 90 days trading horizon Evergreen International Storage is expected to generate 0.58 times more return on investment than Wan Hai. However, Evergreen International Storage is 1.72 times less risky than Wan Hai. It trades about 0.07 of its potential returns per unit of risk. Wan Hai Lines is currently generating about 0.04 per unit of risk. If you would invest  3,105  in Evergreen International Storage on December 28, 2024 and sell it today you would earn a total of  130.00  from holding Evergreen International Storage or generate 4.19% return on investment over 90 days.

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

Evergreen International Storag  vs.  Wan Hai Lines

Evergreen International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen International Storage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Evergreen International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Wan Hai Lines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wan Hai Lines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wan Hai 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 International and Wan Hai

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

The idea behind Evergreen International Storage and Wan Hai Lines 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.