Correlation Between Evolent Health and Fuyao Glass

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

By analyzing existing cross correlation between Evolent Health and Fuyao Glass Industry, you can compare the effects of market volatilities on Evolent Health and Fuyao Glass 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 Evolent Health with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and Fuyao Glass.

Diversification Opportunities for Evolent Health and Fuyao Glass

-0.26

Correlation Coefficient

Evolent Health  Fuyao Glass

Very good diversification

The 3 months correlation between Evolent and Fuyao is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry and Evolent Health 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 Evolent Health are associated (or correlated) with Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Evolent Health i.e., Evolent Health and Fuyao Glass go up and down completely randomly.

Pair Corralation between Evolent Health and Fuyao Glass

Assuming the 90 days horizon Evolent Health is expected to generate 0.68 times more return on investment than Fuyao Glass. However, Evolent Health is 1.46 times less risky than Fuyao Glass. It trades about 0.12 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.07 per unit of risk. If you would invest  730.00  in Evolent Health on April 19, 2025 and sell it today you would earn a total of  240.00  from holding Evolent Health or generate 32.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Evolent Health  vs.  Fuyao Glass Industry

Evolent Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolent Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evolent Health reported solid returns over the last few months and may actually be approaching a breakup point.

Fuyao Glass Industry

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fuyao Glass reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolent Health and Fuyao Glass

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

The idea behind Evolent Health and Fuyao Glass Industry 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.