Correlation Between Eve Holding and Safe Pro

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

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

Diversification Opportunities for Eve Holding and Safe Pro

0.75

Correlation Coefficient

Eve Holding  Safe Pro

Poor diversification

The 3 months correlation between Eve and Safe is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Safe Pro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Pro Group and Eve Holding 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 Eve Holding are associated (or correlated) with Safe Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Pro Group has no effect on the direction of Eve Holding i.e., Eve Holding and Safe Pro go up and down completely randomly.

Pair Corralation between Eve Holding and Safe Pro

Given the investment horizon of 90 days Eve Holding is expected to generate 1.33 times less return on investment than Safe Pro. But when comparing it to its historical volatility, Eve Holding is 3.09 times less risky than Safe Pro. It trades about 0.35 of its potential returns per unit of risk. Safe Pro Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  361.00  in Safe Pro Group on October 9, 2024 and sell it today you would earn a total of  92.00  from holding Safe Pro Group or generate 25.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eve Holding  vs.  Safe Pro Group

Eve Holding

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Safe Pro Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Safe Pro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eve Holding and Safe Pro

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

The idea behind Eve Holding and Safe Pro 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.