Correlation Between Evergreen International and Auras Technology

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

Diversification Opportunities for Evergreen International and Auras Technology

0.72

Correlation Coefficient

Evergreen International  Auras Technology

Poor diversification

The 3 months correlation between Evergreen and Auras is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Auras Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auras Technology 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 Auras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auras Technology has no effect on the direction of Evergreen International i.e., Evergreen International and Auras Technology go up and down completely randomly.

Pair Corralation between Evergreen International and Auras Technology

Assuming the 90 days trading horizon Evergreen International Storage is expected to under-perform the Auras Technology. But the stock apears to be less risky and, when comparing its historical volatility, Evergreen International Storage is 2.66 times less risky than Auras Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Auras Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  62,193  in Auras Technology Co on December 5, 2024 and sell it today you would earn a total of  3,807  from holding Auras Technology Co or generate 6.12% return on investment over 90 days.

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

Evergreen International Storag  vs.  Auras Technology Co

Evergreen International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evergreen International Storage has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Auras Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auras Technology Co 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 International and Auras Technology

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

The idea behind Evergreen International Storage and Auras Technology Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.