Correlation Between Gold Rain and Evergreen Marine

Can any of the company-specific risk be diversified away by investing in both Gold Rain and Evergreen Marine 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 Gold Rain and Evergreen Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Rain Enterprises and Evergreen Marine Corp, you can compare the effects of market volatilities on Gold Rain and Evergreen Marine 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 Gold Rain with a short position of Evergreen Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Rain and Evergreen Marine.

Diversification Opportunities for Gold Rain and Evergreen Marine

0.12

Correlation Coefficient

Gold Rain  Evergreen Marine

Average diversification

The 3 months correlation between Gold and Evergreen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gold Rain Enterprises and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine Corp and Gold Rain 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 Gold Rain Enterprises are associated (or correlated) with Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of Gold Rain i.e., Gold Rain and Evergreen Marine go up and down completely randomly.

Pair Corralation between Gold Rain and Evergreen Marine

Assuming the 90 days trading horizon Gold Rain is expected to generate 1.79 times less return on investment than Evergreen Marine. In addition to that, Gold Rain is 1.22 times more volatile than Evergreen Marine Corp. It trades about 0.04 of its total potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.09 per unit of volatility. If you would invest  8,253  in Evergreen Marine Corp on October 14, 2024 and sell it today you would earn a total of  13,147  from holding Evergreen Marine Corp or generate 159.3% return on investment over 90 days.

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

Gold Rain Enterprises  vs.  Evergreen Marine Corp

Gold Rain Enterprises

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Rain Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gold Rain may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Evergreen Marine Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Rain and Evergreen Marine

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

The idea behind Gold Rain Enterprises and Evergreen Marine Corp 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.