Correlation Between Evertec and Sharing Economy

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

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

Diversification Opportunities for Evertec and Sharing Economy

-0.16

Correlation Coefficient

Evertec  Sharing Economy

Good diversification

The 3 months correlation between Evertec and Sharing is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Sharing Economy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Economy Inte and Evertec 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 Evertec are associated (or correlated) with Sharing Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Economy Inte has no effect on the direction of Evertec i.e., Evertec and Sharing Economy go up and down completely randomly.

Pair Corralation between Evertec and Sharing Economy

Given the investment horizon of 90 days Evertec is expected to generate 31.84 times less return on investment than Sharing Economy. But when comparing it to its historical volatility, Evertec is 8.82 times less risky than Sharing Economy. It trades about 0.02 of its potential returns per unit of risk. Sharing Economy International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Sharing Economy International on September 18, 2024 and sell it today you would earn a total of  0.02  from holding Sharing Economy International or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.06%
Values	Daily Returns

Evertec  vs.  Sharing Economy International

Evertec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sharing Economy Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharing Economy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sharing Economy is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Evertec and Sharing Economy

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

The idea behind Evertec and Sharing Economy International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.