Correlation Between Evergreen International and Penpower Technology

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

Diversification Opportunities for Evergreen International and Penpower Technology

0.1

Correlation Coefficient

Evergreen International  Penpower Technology

Average diversification

The 3 months correlation between Evergreen and Penpower is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Penpower Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penpower 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 Penpower Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penpower Technology has no effect on the direction of Evergreen International i.e., Evergreen International and Penpower Technology go up and down completely randomly.

Pair Corralation between Evergreen International and Penpower Technology

Assuming the 90 days trading horizon Evergreen International is expected to generate 1.81 times less return on investment than Penpower Technology. But when comparing it to its historical volatility, Evergreen International Storage is 1.41 times less risky than Penpower Technology. It trades about 0.04 of its potential returns per unit of risk. Penpower Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,660  in Penpower Technology on December 25, 2024 and sell it today you would earn a total of  105.00  from holding Penpower Technology or generate 3.95% return on investment over 90 days.

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

Evergreen International Storag  vs.  Penpower Technology

Evergreen International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen International Storage are ranked lower than 2 (%) 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.

Penpower Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penpower Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Penpower Technology 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 Penpower Technology

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

The idea behind Evergreen International Storage and Penpower Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.