Correlation Between Ever Clear and Champion Building

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

By analyzing existing cross correlation between Ever Clear Environmental Eng and Champion Building Materials, you can compare the effects of market volatilities on Ever Clear and Champion Building 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 Ever Clear with a short position of Champion Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ever Clear and Champion Building.

Diversification Opportunities for Ever Clear and Champion Building

0.49

Correlation Coefficient

Ever Clear  Champion Building

Very weak diversification

The 3 months correlation between Ever and Champion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ever Clear Environmental Eng and Champion Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Building and Ever Clear 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 Ever Clear Environmental Eng are associated (or correlated) with Champion Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Building has no effect on the direction of Ever Clear i.e., Ever Clear and Champion Building go up and down completely randomly.

Pair Corralation between Ever Clear and Champion Building

Assuming the 90 days trading horizon Ever Clear Environmental Eng is expected to under-perform the Champion Building. But the stock apears to be less risky and, when comparing its historical volatility, Ever Clear Environmental Eng is 2.59 times less risky than Champion Building. The stock trades about -0.07 of its potential returns per unit of risk. The Champion Building Materials is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Champion Building Materials on September 27, 2024 and sell it today you would lose (15.00) from holding Champion Building Materials or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Ever Clear Environmental Eng  vs.  Champion Building Materials

Ever Clear Environme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ever Clear Environmental Eng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ever Clear is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Champion Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ever Clear and Champion Building

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

The idea behind Ever Clear Environmental Eng and Champion Building Materials 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.