Correlation Between Cipherlab and Evergreen Marine

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

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

Diversification Opportunities for Cipherlab and Evergreen Marine

-0.53

Correlation Coefficient

Cipherlab  Evergreen Marine

Excellent diversification

The 3 months correlation between Cipherlab and Evergreen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cipherlab Co 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 Cipherlab 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 Cipherlab Co 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 Cipherlab i.e., Cipherlab and Evergreen Marine go up and down completely randomly.

Pair Corralation between Cipherlab and Evergreen Marine

Assuming the 90 days trading horizon Cipherlab Co is expected to under-perform the Evergreen Marine. But the stock apears to be less risky and, when comparing its historical volatility, Cipherlab Co is 1.24 times less risky than Evergreen Marine. The stock trades about -0.12 of its potential returns per unit of risk. The Evergreen Marine Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  22,800  in Evergreen Marine Corp on September 25, 2024 and sell it today you would earn a total of  400.00  from holding Evergreen Marine Corp or generate 1.75% return on investment over 90 days.

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

Cipherlab Co  vs.  Evergreen Marine Corp

Cipherlab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cipherlab Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Evergreen Marine Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cipherlab and Evergreen Marine

The main advantage of trading using opposite Cipherlab and Evergreen Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cipherlab 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 Cipherlab Co 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.