Correlation Between Diageo PLC and EvoAir Holdings

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

By analyzing existing cross correlation between Diageo PLC ADR and EvoAir Holdings, you can compare the effects of market volatilities on Diageo PLC and EvoAir Holdings 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 Diageo PLC with a short position of EvoAir Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and EvoAir Holdings.

Diversification Opportunities for Diageo PLC and EvoAir Holdings

0.0

Correlation Coefficient

Diageo PLC  EvoAir Holdings

Pay attention - limited upside

The 3 months correlation between Diageo and EvoAir is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and EvoAir Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EvoAir Holdings and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with EvoAir Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EvoAir Holdings has no effect on the direction of Diageo PLC i.e., Diageo PLC and EvoAir Holdings go up and down completely randomly.

Pair Corralation between Diageo PLC and EvoAir Holdings

If you would invest (100.00) in EvoAir Holdings on December 26, 2024 and sell it today you would earn a total of  100.00  from holding EvoAir Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Diageo PLC ADR  vs.  EvoAir Holdings

Diageo PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EvoAir Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days EvoAir Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, EvoAir Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Diageo PLC and EvoAir Holdings

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

The idea behind Diageo PLC ADR and EvoAir Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.