Correlation Between Evergreen Marine and Eagle Cold

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

Diversification Opportunities for Evergreen Marine and Eagle Cold

-0.73

Correlation Coefficient

Evergreen Marine  Eagle Cold

Pay attention - limited upside

The 3 months correlation between Evergreen and Eagle is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage 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 Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Evergreen Marine i.e., Evergreen Marine and Eagle Cold go up and down completely randomly.

Pair Corralation between Evergreen Marine and Eagle Cold

Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 3.25 times more return on investment than Eagle Cold. However, Evergreen Marine is 3.25 times more volatile than Eagle Cold Storage. It trades about 0.1 of its potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.03 per unit of risk. If you would invest  12,200  in Evergreen Marine Corp on September 4, 2024 and sell it today you would earn a total of  9,900  from holding Evergreen Marine Corp or generate 81.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Evergreen Marine Corp  vs.  Eagle Cold Storage

Evergreen Marine Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 12 (%) 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.

Eagle Cold Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Cold Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eagle Cold 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 Eagle Cold

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

The idea behind Evergreen Marine Corp and Eagle Cold Storage 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.