Correlation Between NYSE Composite and Ever Glory

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

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

Diversification Opportunities for NYSE Composite and Ever Glory

-0.81

Correlation Coefficient

NYSE Composite  Ever Glory

Pay attention - limited upside

The 3 months correlation between NYSE and Ever is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ever Glory International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Glory Internati and NYSE Composite 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 NYSE Composite are associated (or correlated) with Ever Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Glory Internati has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ever Glory go up and down completely randomly.

Pair Corralation between NYSE Composite and Ever Glory

Assuming the 90 days trading horizon NYSE Composite is expected to generate 148.52 times less return on investment than Ever Glory. But when comparing it to its historical volatility, NYSE Composite is 77.51 times less risky than Ever Glory. It trades about 0.03 of its potential returns per unit of risk. Ever Glory International Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  138.00  in Ever Glory International Group on January 29, 2024 and sell it today you would lose (116.00) from holding Ever Glory International Group or give up 84.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	38.32%
Values	Daily Returns

NYSE Composite  vs.  Ever Glory International Group

Pair Trading with NYSE Composite and Ever Glory

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

The idea behind NYSE Composite and Ever Glory International Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.