Correlation Between Eva Airways and TOPBI International
Can any of the company-specific risk be diversified away by investing in both Eva Airways and TOPBI 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 Eva Airways and TOPBI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eva Airways Corp and TOPBI International Holdings, you can compare the effects of market volatilities on Eva Airways and TOPBI 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 Eva Airways with a short position of TOPBI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eva Airways and TOPBI International.
Diversification Opportunities for Eva Airways and TOPBI International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eva and TOPBI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eva Airways Corp and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International and Eva Airways 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 Eva Airways Corp are associated (or correlated) with TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of Eva Airways i.e., Eva Airways and TOPBI International go up and down completely randomly.
Pair Corralation between Eva Airways and TOPBI International
Assuming the 90 days trading horizon Eva Airways is expected to generate 2.67 times less return on investment than TOPBI International. But when comparing it to its historical volatility, Eva Airways Corp is 2.42 times less risky than TOPBI International. It trades about 0.19 of its potential returns per unit of risk. TOPBI International Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 927.00 in TOPBI International Holdings on September 25, 2024 and sell it today you would earn a total of 583.00 from holding TOPBI International Holdings or generate 62.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Eva Airways Corp vs. TOPBI International Holdings
Performance |
Timeline |
Eva Airways Corp |
TOPBI International |
Eva Airways and TOPBI International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eva Airways and TOPBI International
The main advantage of trading using opposite Eva Airways and TOPBI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eva Airways position performs unexpectedly, TOPBI 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 TOPBI International will offset losses from the drop in TOPBI International's long position.Eva Airways vs. Yang Ming Marine | Eva Airways vs. Evergreen Marine Corp | Eva Airways vs. U Ming Marine Transport |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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