Correlation Between Evertec and MicroAlgo

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

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

Diversification Opportunities for Evertec and MicroAlgo

0.57

Correlation Coefficient

Evertec  MicroAlgo

Very weak diversification

The 3 months correlation between Evertec and MicroAlgo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo 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 MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of Evertec i.e., Evertec and MicroAlgo go up and down completely randomly.

Pair Corralation between Evertec and MicroAlgo

Given the investment horizon of 90 days Evertec is expected to generate 88.28 times less return on investment than MicroAlgo. But when comparing it to its historical volatility, Evertec is 33.98 times less risky than MicroAlgo. It trades about 0.06 of its potential returns per unit of risk. MicroAlgo is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  407.00  in MicroAlgo on December 30, 2024 and sell it today you would earn a total of  1,328  from holding MicroAlgo or generate 326.29% return on investment over 90 days.

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

Evertec  vs.  MicroAlgo

Evertec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MicroAlgo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MicroAlgo are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, MicroAlgo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evertec and MicroAlgo

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

The idea behind Evertec and MicroAlgo 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.