Correlation Between EVS Broadcast and PATRICK INDUSTR

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

By analyzing existing cross correlation between EVS Broadcast Equipment and PATRICK INDUSTR, you can compare the effects of market volatilities on EVS Broadcast and PATRICK INDUSTR 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 EVS Broadcast with a short position of PATRICK INDUSTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and PATRICK INDUSTR.

Diversification Opportunities for EVS Broadcast and PATRICK INDUSTR

0.18

Correlation Coefficient

EVS Broadcast  PATRICK INDUSTR

Average diversification

The 3 months correlation between EVS and PATRICK is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and PATRICK INDUSTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PATRICK INDUSTR and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with PATRICK INDUSTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PATRICK INDUSTR has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and PATRICK INDUSTR go up and down completely randomly.

Pair Corralation between EVS Broadcast and PATRICK INDUSTR

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 0.5 times more return on investment than PATRICK INDUSTR. However, EVS Broadcast Equipment is 1.98 times less risky than PATRICK INDUSTR. It trades about 0.14 of its potential returns per unit of risk. PATRICK INDUSTR is currently generating about -0.03 per unit of risk. If you would invest  2,795  in EVS Broadcast Equipment on September 27, 2024 and sell it today you would earn a total of  300.00  from holding EVS Broadcast Equipment or generate 10.73% return on investment over 90 days.

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

EVS Broadcast Equipment  vs.  PATRICK INDUSTR

EVS Broadcast Equipment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PATRICK INDUSTR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EVS Broadcast and PATRICK INDUSTR

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

The idea behind EVS Broadcast Equipment and PATRICK INDUSTR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.