Correlation Between Evergreen Marine and Taishin Financial

Can any of the company-specific risk be diversified away by investing in both Evergreen Marine and Taishin Financial 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 Taishin Financial 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 Taishin Financial Holding, you can compare the effects of market volatilities on Evergreen Marine and Taishin Financial 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 Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Taishin Financial.

Diversification Opportunities for Evergreen Marine and Taishin Financial

-0.65

Correlation Coefficient

Evergreen Marine  Taishin Financial

Excellent diversification

The 3 months correlation between Evergreen and Taishin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding 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 Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Taishin Financial go up and down completely randomly.

Pair Corralation between Evergreen Marine and Taishin Financial

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 10.06 times more return on investment than Taishin Financial. However, Evergreen Marine is 10.06 times more volatile than Taishin Financial Holding. It trades about 0.09 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.04 per unit of risk. If you would invest  20,600  in Evergreen Marine Corp on September 26, 2024 and sell it today you would earn a total of  2,600  from holding Evergreen Marine Corp or generate 12.62% return on investment over 90 days.

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

Evergreen Marine Corp  vs.  Taishin Financial Holding

Evergreen Marine Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 7 (%) 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.

Taishin Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taishin Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Taishin Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evergreen Marine and Taishin Financial

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

The idea behind Evergreen Marine Corp and Taishin Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.