Correlation Between South Books and EVN Finance

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

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

Diversification Opportunities for South Books and EVN Finance

-0.42

Correlation Coefficient

South Books  EVN Finance

Very good diversification

The 3 months correlation between South and EVN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding South Books Educational and EVN Finance JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN Finance JSC and South Books 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 South Books Educational are associated (or correlated) with EVN Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN Finance JSC has no effect on the direction of South Books i.e., South Books and EVN Finance go up and down completely randomly.

Pair Corralation between South Books and EVN Finance

Assuming the 90 days trading horizon South Books Educational is expected to generate 1.49 times more return on investment than EVN Finance. However, South Books is 1.49 times more volatile than EVN Finance JSC. It trades about 0.03 of its potential returns per unit of risk. EVN Finance JSC is currently generating about 0.03 per unit of risk. If you would invest  1,156,068  in South Books Educational on October 10, 2024 and sell it today you would earn a total of  143,932  from holding South Books Educational or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	51.22%
Values	Daily Returns

South Books Educational  vs.  EVN Finance JSC

South Books Educational

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in South Books Educational are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, South Books is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

EVN Finance JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN Finance JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with South Books and EVN Finance

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

The idea behind South Books Educational and EVN Finance JSC 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.