Correlation Between Gladstone Investment and Evolution Mining

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

By analyzing existing cross correlation between Gladstone Investment and Evolution Mining Limited, you can compare the effects of market volatilities on Gladstone Investment and Evolution Mining 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 Gladstone Investment with a short position of Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Evolution Mining.

Diversification Opportunities for Gladstone Investment and Evolution Mining

0.87

Correlation Coefficient

Gladstone Investment  Evolution Mining

Very poor diversification

The 3 months correlation between Gladstone and Evolution is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Evolution Mining go up and down completely randomly.

Pair Corralation between Gladstone Investment and Evolution Mining

Assuming the 90 days horizon Gladstone Investment is expected to generate 1.09 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, Gladstone Investment is 1.05 times less risky than Evolution Mining. It trades about 0.16 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Evolution Mining Limited on September 5, 2024 and sell it today you would earn a total of  59.00  from holding Evolution Mining Limited or generate 24.69% return on investment over 90 days.

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

Gladstone Investment  vs.  Evolution Mining Limited

Gladstone Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and Evolution Mining

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

The idea behind Gladstone Investment and Evolution Mining Limited 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.