Correlation Between EVS Broadcast and THRACE PLASTICS

Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and THRACE PLASTICS 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 EVS Broadcast and THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVS Broadcast Equipment and THRACE PLASTICS, you can compare the effects of market volatilities on EVS Broadcast and THRACE PLASTICS 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 EVS Broadcast with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and THRACE PLASTICS.

Diversification Opportunities for EVS Broadcast and THRACE PLASTICS

0.27

Correlation Coefficient

EVS Broadcast  THRACE PLASTICS

Modest diversification

The 3 months correlation between EVS and THRACE is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between EVS Broadcast and THRACE PLASTICS

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 0.93 times more return on investment than THRACE PLASTICS. However, EVS Broadcast Equipment is 1.08 times less risky than THRACE PLASTICS. It trades about 0.1 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.02 per unit of risk. If you would invest  2,824  in EVS Broadcast Equipment on September 15, 2024 and sell it today you would earn a total of  206.00  from holding EVS Broadcast Equipment or generate 7.29% return on investment over 90 days.

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

EVS Broadcast Equipment  vs.  THRACE PLASTICS

EVS Broadcast Equipment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

THRACE PLASTICS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EVS Broadcast and THRACE PLASTICS

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

The idea behind EVS Broadcast Equipment and THRACE PLASTICS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.