Correlation Between Ever Glory and Kontoor Brands

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

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

Diversification Opportunities for Ever Glory and Kontoor Brands

0.14

Correlation Coefficient

Ever Glory  Kontoor Brands

Average diversification

The 3 months correlation between Ever and Kontoor is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ever Glory International Group and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Ever Glory 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 Ever Glory International Group are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Ever Glory i.e., Ever Glory and Kontoor Brands go up and down completely randomly.

Pair Corralation between Ever Glory and Kontoor Brands

Considering the 90-day investment horizon Ever Glory International Group is expected to generate 26.12 times more return on investment than Kontoor Brands. However, Ever Glory is 26.12 times more volatile than Kontoor Brands. It trades about 0.05 of its potential returns per unit of risk. Kontoor Brands is currently generating about 0.04 per unit of risk. If you would invest  136.00  in Ever Glory International Group on January 20, 2024 and sell it today you would lose (114.00) from holding Ever Glory International Group or give up 83.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.02%
Values	Daily Returns

Ever Glory International Group  vs.  Kontoor Brands

Ever Glory Internati

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ever Glory International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ever Glory is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Kontoor Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kontoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kontoor Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ever Glory and Kontoor Brands

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

The idea behind Ever Glory International Group and Kontoor Brands 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.