Correlation Between EVS Broadcast and Crescent

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

Diversification Opportunities for EVS Broadcast and Crescent

-0.03

Correlation Coefficient

EVS Broadcast  Crescent

Good diversification

The 3 months correlation between EVS and Crescent is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Crescent NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent NV 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 Crescent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent NV has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Crescent go up and down completely randomly.

Pair Corralation between EVS Broadcast and Crescent

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 0.35 times more return on investment than Crescent. However, EVS Broadcast Equipment is 2.85 times less risky than Crescent. It trades about 0.05 of its potential returns per unit of risk. Crescent NV is currently generating about -0.04 per unit of risk. If you would invest  2,868  in EVS Broadcast Equipment on September 12, 2024 and sell it today you would earn a total of  107.00  from holding EVS Broadcast Equipment or generate 3.73% return on investment over 90 days.

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

EVS Broadcast Equipment  vs.  Crescent NV

EVS Broadcast Equipment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, EVS Broadcast is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Crescent NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crescent NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with EVS Broadcast and Crescent

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

The idea behind EVS Broadcast Equipment and Crescent NV 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.