Correlation Between American Public and Evolution Mining

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

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

Diversification Opportunities for American Public and Evolution Mining

-0.35

Correlation Coefficient

American Public  Evolution Mining

Very good diversification

The 3 months correlation between American and Evolution is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and American Public 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 American Public Education 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 American Public i.e., American Public and Evolution Mining go up and down completely randomly.

Pair Corralation between American Public and Evolution Mining

Assuming the 90 days horizon American Public is expected to generate 3.94 times less return on investment than Evolution Mining. In addition to that, American Public is 1.4 times more volatile than Evolution Mining Limited. It trades about 0.12 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.63 per unit of volatility. If you would invest  288.00  in Evolution Mining Limited on October 24, 2024 and sell it today you would earn a total of  48.00  from holding Evolution Mining Limited or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

American Public Education  vs.  Evolution Mining Limited

American Public Education

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Public reported solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American Public and Evolution Mining

The main advantage of trading using opposite American Public and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public 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 American Public Education 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.