Correlation Between Everspin Technologies and China Southern

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

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

Diversification Opportunities for Everspin Technologies and China Southern

0.41

Correlation Coefficient

Everspin Technologies  China Southern

Very weak diversification

The 3 months correlation between Everspin and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and Everspin Technologies 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 Everspin Technologies are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Everspin Technologies i.e., Everspin Technologies and China Southern go up and down completely randomly.

Pair Corralation between Everspin Technologies and China Southern

Given the investment horizon of 90 days Everspin Technologies is expected to generate 0.62 times more return on investment than China Southern. However, Everspin Technologies is 1.62 times less risky than China Southern. It trades about 0.01 of its potential returns per unit of risk. China Southern Airlines is currently generating about 0.0 per unit of risk. If you would invest  690.00  in Everspin Technologies on October 22, 2024 and sell it today you would lose (58.00) from holding Everspin Technologies or give up 8.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Everspin Technologies  vs.  China Southern Airlines

Everspin Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Everspin Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Southern Airlines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Southern Airlines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, China Southern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everspin Technologies and China Southern

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

The idea behind Everspin Technologies and China Southern Airlines 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.