Correlation Between Evertec and Couchbase

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

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

Diversification Opportunities for Evertec and Couchbase

0.32

Correlation Coefficient

Evertec  Couchbase

Weak diversification

The 3 months correlation between Evertec and Couchbase is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and Evertec 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 Evertec are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of Evertec i.e., Evertec and Couchbase go up and down completely randomly.

Pair Corralation between Evertec and Couchbase

Given the investment horizon of 90 days Evertec is expected to generate 0.35 times more return on investment than Couchbase. However, Evertec is 2.82 times less risky than Couchbase. It trades about -0.12 of its potential returns per unit of risk. Couchbase is currently generating about -0.08 per unit of risk. If you would invest  3,600  in Evertec on November 28, 2024 and sell it today you would lose (334.00) from holding Evertec or give up 9.28% of portfolio value over 90 days.

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

Evertec  vs.  Couchbase

Evertec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Couchbase

Risk-Adjusted Performance

Very Weak

Over the last 90 days Couchbase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Evertec and Couchbase

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

The idea behind Evertec and Couchbase 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.