Correlation Between Eva Airways and GeoVision

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

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

Diversification Opportunities for Eva Airways and GeoVision

-0.66

Correlation Coefficient

Eva Airways  GeoVision

Excellent diversification

The 3 months correlation between Eva and GeoVision is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eva Airways Corp and GeoVision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVision and Eva Airways 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 Eva Airways Corp are associated (or correlated) with GeoVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVision has no effect on the direction of Eva Airways i.e., Eva Airways and GeoVision go up and down completely randomly.

Pair Corralation between Eva Airways and GeoVision

Assuming the 90 days trading horizon Eva Airways Corp is expected to generate 0.72 times more return on investment than GeoVision. However, Eva Airways Corp is 1.39 times less risky than GeoVision. It trades about 0.17 of its potential returns per unit of risk. GeoVision is currently generating about -0.06 per unit of risk. If you would invest  3,735  in Eva Airways Corp on September 22, 2024 and sell it today you would earn a total of  725.00  from holding Eva Airways Corp or generate 19.41% return on investment over 90 days.

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

Eva Airways Corp  vs.  GeoVision

Eva Airways Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eva Airways Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eva Airways showed solid returns over the last few months and may actually be approaching a breakup point.

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Eva Airways and GeoVision

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

The idea behind Eva Airways Corp and GeoVision 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.