Correlation Between Mitake Information and Evergreen Marine

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

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

Diversification Opportunities for Mitake Information and Evergreen Marine

0.77

Correlation Coefficient

Mitake Information  Evergreen Marine

Poor diversification

The 3 months correlation between Mitake and Evergreen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mitake Information and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine Corp and Mitake Information 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 Mitake Information are associated (or correlated) with Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of Mitake Information i.e., Mitake Information and Evergreen Marine go up and down completely randomly.

Pair Corralation between Mitake Information and Evergreen Marine

Assuming the 90 days trading horizon Mitake Information is expected to generate 1.85 times less return on investment than Evergreen Marine. But when comparing it to its historical volatility, Mitake Information is 3.25 times less risky than Evergreen Marine. It trades about 0.12 of its potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20,950  in Evergreen Marine Corp on September 25, 2024 and sell it today you would earn a total of  1,850  from holding Evergreen Marine Corp or generate 8.83% return on investment over 90 days.

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

Mitake Information  vs.  Evergreen Marine Corp

Mitake Information

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitake Information are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mitake Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Evergreen Marine Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mitake Information and Evergreen Marine

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

The idea behind Mitake Information and Evergreen Marine Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.