Correlation Between EVI Industries and Mastech Holdings

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

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

Diversification Opportunities for EVI Industries and Mastech Holdings

0.22

Correlation Coefficient

EVI Industries  Mastech Holdings

Modest diversification

The 3 months correlation between EVI and Mastech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and Mastech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastech Holdings and EVI Industries 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 EVI Industries are associated (or correlated) with Mastech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastech Holdings has no effect on the direction of EVI Industries i.e., EVI Industries and Mastech Holdings go up and down completely randomly.

Pair Corralation between EVI Industries and Mastech Holdings

Considering the 90-day investment horizon EVI Industries is expected to generate 1.79 times less return on investment than Mastech Holdings. But when comparing it to its historical volatility, EVI Industries is 1.52 times less risky than Mastech Holdings. It trades about 0.12 of its potential returns per unit of risk. Mastech Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,012  in Mastech Holdings on August 31, 2024 and sell it today you would earn a total of  479.00  from holding Mastech Holdings or generate 47.33% return on investment over 90 days.

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

EVI Industries  vs.  Mastech Holdings

EVI Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVI Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, EVI Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mastech Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastech Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Mastech Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVI Industries and Mastech Holdings

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

The idea behind EVI Industries and Mastech 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.