Correlation Between Euroseas and Caravelle International

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

By analyzing existing cross correlation between Euroseas and Caravelle International Group, you can compare the effects of market volatilities on Euroseas and Caravelle International 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 Euroseas with a short position of Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euroseas and Caravelle International.

Diversification Opportunities for Euroseas and Caravelle International

-0.87

Correlation Coefficient

Euroseas  Caravelle International

Pay attention - limited upside

The 3 months correlation between Euroseas and Caravelle is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and Euroseas 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 Euroseas are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Euroseas i.e., Euroseas and Caravelle International go up and down completely randomly.

Pair Corralation between Euroseas and Caravelle International

Given the investment horizon of 90 days Euroseas is expected to generate 2.35 times less return on investment than Caravelle International. But when comparing it to its historical volatility, Euroseas is 2.94 times less risky than Caravelle International. It trades about 0.07 of its potential returns per unit of risk. Caravelle International Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Caravelle International Group on September 28, 2024 and sell it today you would earn a total of  121.00  from holding Caravelle International Group or generate 97.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Euroseas  vs.  Caravelle International Group

Euroseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Caravelle International

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caravelle International Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Euroseas and Caravelle International

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

The idea behind Euroseas and Caravelle International Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.