Correlation Between EVE Energy and Hubeiyichang Transportation

Can any of the company-specific risk be diversified away by investing in both EVE Energy and Hubeiyichang Transportation 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 EVE Energy and Hubeiyichang Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVE Energy and Hubeiyichang Transportation Group, you can compare the effects of market volatilities on EVE Energy and Hubeiyichang Transportation 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 EVE Energy with a short position of Hubeiyichang Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVE Energy and Hubeiyichang Transportation.

Diversification Opportunities for EVE Energy and Hubeiyichang Transportation

0.36

Correlation Coefficient

EVE Energy  Hubeiyichang Transportation

Weak diversification

The 3 months correlation between EVE and Hubeiyichang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding EVE Energy and Hubeiyichang Transportation Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubeiyichang Transportation and EVE Energy 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 EVE Energy are associated (or correlated) with Hubeiyichang Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubeiyichang Transportation has no effect on the direction of EVE Energy i.e., EVE Energy and Hubeiyichang Transportation go up and down completely randomly.

Pair Corralation between EVE Energy and Hubeiyichang Transportation

Assuming the 90 days trading horizon EVE Energy is expected to generate 2.32 times more return on investment than Hubeiyichang Transportation. However, EVE Energy is 2.32 times more volatile than Hubeiyichang Transportation Group. It trades about 0.09 of its potential returns per unit of risk. Hubeiyichang Transportation Group is currently generating about 0.05 per unit of risk. If you would invest  3,494  in EVE Energy on December 25, 2024 and sell it today you would earn a total of  1,401  from holding EVE Energy or generate 40.1% return on investment over 90 days.

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

EVE Energy  vs.  Hubeiyichang Transportation Gr

EVE Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EVE Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EVE Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hubeiyichang Transportation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubeiyichang Transportation Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hubeiyichang Transportation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EVE Energy and Hubeiyichang Transportation

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

The idea behind EVE Energy and Hubeiyichang Transportation Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.