Correlation Between Park Electrochemical and Eve Holding

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

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

Diversification Opportunities for Park Electrochemical and Eve Holding

0.43

Correlation Coefficient

Park Electrochemical  Eve Holding

Very weak diversification

The 3 months correlation between Park and Eve is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Eve Holding go up and down completely randomly.

Pair Corralation between Park Electrochemical and Eve Holding

Considering the 90-day investment horizon Park Electrochemical is expected to generate 7.05 times less return on investment than Eve Holding. But when comparing it to its historical volatility, Park Electrochemical is 2.05 times less risky than Eve Holding. It trades about 0.03 of its potential returns per unit of risk. Eve Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Eve Holding on September 30, 2024 and sell it today you would earn a total of  216.00  from holding Eve Holding or generate 66.46% return on investment over 90 days.

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

Park Electrochemical  vs.  Eve Holding

Park Electrochemical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Park Electrochemical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eve Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Electrochemical and Eve Holding

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

The idea behind Park Electrochemical and Eve Holding 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.