Correlation Between Everdisplay Optronics and 360 Security

Can any of the company-specific risk be diversified away by investing in both Everdisplay Optronics and 360 Security 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 Everdisplay Optronics and 360 Security into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everdisplay Optronics Shanghai and 360 Security Technology, you can compare the effects of market volatilities on Everdisplay Optronics and 360 Security 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 Everdisplay Optronics with a short position of 360 Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everdisplay Optronics and 360 Security.

Diversification Opportunities for Everdisplay Optronics and 360 Security

0.5

Correlation Coefficient

Everdisplay Optronics  360 Security

Very weak diversification

The 3 months correlation between Everdisplay and 360 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Everdisplay Optronics Shanghai and 360 Security Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 Security Technology and Everdisplay Optronics 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 Everdisplay Optronics Shanghai are associated (or correlated) with 360 Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 Security Technology has no effect on the direction of Everdisplay Optronics i.e., Everdisplay Optronics and 360 Security go up and down completely randomly.

Pair Corralation between Everdisplay Optronics and 360 Security

Assuming the 90 days trading horizon Everdisplay Optronics Shanghai is expected to under-perform the 360 Security. But the stock apears to be less risky and, when comparing its historical volatility, Everdisplay Optronics Shanghai is 2.36 times less risky than 360 Security. The stock trades about -0.01 of its potential returns per unit of risk. The 360 Security Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  670.00  in 360 Security Technology on October 3, 2024 and sell it today you would earn a total of  365.00  from holding 360 Security Technology or generate 54.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Everdisplay Optronics Shanghai  vs.  360 Security Technology

Everdisplay Optronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everdisplay Optronics Shanghai 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

360 Security Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Security Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 360 Security sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everdisplay Optronics and 360 Security

The main advantage of trading using opposite Everdisplay Optronics and 360 Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everdisplay Optronics position performs unexpectedly, 360 Security 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 360 Security will offset losses from the drop in 360 Security's long position.

The idea behind Everdisplay Optronics Shanghai and 360 Security Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.