Correlation Between EVE Energy and Anji Foodstuff

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

By analyzing existing cross correlation between EVE Energy and Anji Foodstuff Co, you can compare the effects of market volatilities on EVE Energy and Anji Foodstuff 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 Anji Foodstuff. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVE Energy and Anji Foodstuff.

Diversification Opportunities for EVE Energy and Anji Foodstuff

0.21

Correlation Coefficient

EVE Energy  Anji Foodstuff

Modest diversification

The 3 months correlation between EVE and Anji is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding EVE Energy and Anji Foodstuff Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anji Foodstuff 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 Anji Foodstuff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anji Foodstuff has no effect on the direction of EVE Energy i.e., EVE Energy and Anji Foodstuff go up and down completely randomly.

Pair Corralation between EVE Energy and Anji Foodstuff

Assuming the 90 days trading horizon EVE Energy is expected to generate 1.15 times more return on investment than Anji Foodstuff. However, EVE Energy is 1.15 times more volatile than Anji Foodstuff Co. It trades about 0.03 of its potential returns per unit of risk. Anji Foodstuff Co is currently generating about -0.02 per unit of risk. If you would invest  4,078  in EVE Energy on October 7, 2024 and sell it today you would earn a total of  301.00  from holding EVE Energy or generate 7.38% 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.  Anji Foodstuff Co

EVE Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVE Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Anji Foodstuff

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anji Foodstuff Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Anji Foodstuff 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 Anji Foodstuff

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

The idea behind EVE Energy and Anji Foodstuff 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.