Correlation Between First Steamship and Evergreen International

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

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

Diversification Opportunities for First Steamship and Evergreen International

0.65

Correlation Coefficient

First Steamship  Evergreen International

Poor diversification

The 3 months correlation between First and Evergreen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International and First Steamship 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 First Steamship Co are associated (or correlated) with Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of First Steamship i.e., First Steamship and Evergreen International go up and down completely randomly.

Pair Corralation between First Steamship and Evergreen International

Assuming the 90 days trading horizon First Steamship is expected to generate 4.1 times less return on investment than Evergreen International. But when comparing it to its historical volatility, First Steamship Co is 1.83 times less risky than Evergreen International. It trades about 0.11 of its potential returns per unit of risk. Evergreen International Storage is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,125  in Evergreen International Storage on February 4, 2024 and sell it today you would earn a total of  300.00  from holding Evergreen International Storage or generate 9.6% return on investment over 90 days.

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

First Steamship Co  vs.  Evergreen International Storag

First Steamship

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Steamship Co 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.

Evergreen International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen International Storage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen International may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with First Steamship and Evergreen International

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

The idea behind First Steamship Co and Evergreen International Storage 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.