Correlation Between Evergreen Marine and Shin Zu

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

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

Diversification Opportunities for Evergreen Marine and Shin Zu

0.48

Correlation Coefficient

Evergreen Marine  Shin Zu

Very weak diversification

The 3 months correlation between Evergreen and Shin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Shin Zu Shing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Zu Shing and Evergreen Marine 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 Evergreen Marine Corp are associated (or correlated) with Shin Zu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Zu Shing has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Shin Zu go up and down completely randomly.

Pair Corralation between Evergreen Marine and Shin Zu

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 0.72 times more return on investment than Shin Zu. However, Evergreen Marine Corp is 1.39 times less risky than Shin Zu. It trades about 0.17 of its potential returns per unit of risk. Shin Zu Shing is currently generating about -0.09 per unit of risk. If you would invest  16,800  in Evergreen Marine Corp on February 5, 2024 and sell it today you would earn a total of  1,200  from holding Evergreen Marine Corp or generate 7.14% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Shin Zu Shing

Evergreen Marine Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine showed solid returns over the last few months and may actually be approaching a breakup point.

Shin Zu Shing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Zu Shing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shin Zu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Evergreen Marine and Shin Zu

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

The idea behind Evergreen Marine Corp and Shin Zu Shing 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.