Correlation Between Iat Automobile and EVE Energy

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

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

Diversification Opportunities for Iat Automobile and EVE Energy

0.65

Correlation Coefficient

Iat Automobile  EVE Energy

Poor diversification

The 3 months correlation between Iat and EVE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and EVE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVE Energy and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with EVE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVE Energy has no effect on the direction of Iat Automobile i.e., Iat Automobile and EVE Energy go up and down completely randomly.

Pair Corralation between Iat Automobile and EVE Energy

Assuming the 90 days trading horizon Iat Automobile Technology is expected to under-perform the EVE Energy. In addition to that, Iat Automobile is 1.39 times more volatile than EVE Energy. It trades about -0.17 of its total potential returns per unit of risk. EVE Energy is currently generating about -0.1 per unit of volatility. If you would invest  4,926  in EVE Energy on October 2, 2024 and sell it today you would lose (252.00) from holding EVE Energy or give up 5.12% of portfolio value over 90 days.

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

Iat Automobile Technology  vs.  EVE Energy

Iat Automobile Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iat Automobile Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iat Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Iat Automobile and EVE Energy

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

The idea behind Iat Automobile Technology and EVE Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.