Correlation Between Evergreen Corp and Jupiter Acquisition

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

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

Diversification Opportunities for Evergreen Corp and Jupiter Acquisition

0.77

Correlation Coefficient

Evergreen Corp  Jupiter Acquisition

Poor diversification

The 3 months correlation between Evergreen and Jupiter is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Corp and Jupiter Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Acquisition Corp and Evergreen Corp 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 Evergreen Corp are associated (or correlated) with Jupiter Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Acquisition Corp has no effect on the direction of Evergreen Corp i.e., Evergreen Corp and Jupiter Acquisition go up and down completely randomly.

Pair Corralation between Evergreen Corp and Jupiter Acquisition

Given the investment horizon of 90 days Evergreen Corp is expected to generate 1.44 times less return on investment than Jupiter Acquisition. But when comparing it to its historical volatility, Evergreen Corp is 1.94 times less risky than Jupiter Acquisition. It trades about 0.16 of its potential returns per unit of risk. Jupiter Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Jupiter Acquisition Corp on October 4, 2024 and sell it today you would earn a total of  54.00  from holding Jupiter Acquisition Corp or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.41%
Values	Daily Returns

Evergreen Corp  vs.  Jupiter Acquisition Corp

Evergreen Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Evergreen Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Jupiter Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jupiter Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Jupiter Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evergreen Corp and Jupiter Acquisition

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

The idea behind Evergreen Corp and Jupiter Acquisition Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.