Correlation Between Alaska Air and Evolution Mining

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Can any of the company-specific risk be diversified away by investing in both Alaska Air 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 Alaska Air and Evolution Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Evolution Mining Limited, you can compare the effects of market volatilities on Alaska Air 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 Alaska Air with a short position of Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Evolution Mining.

Diversification Opportunities for Alaska Air and Evolution Mining

AlaskaEvolutionDiversified AwayAlaskaEvolutionDiversified Away100%
0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alaska and Evolution is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Alaska Air 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 Alaska Air Group 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 Alaska Air i.e., Alaska Air and Evolution Mining go up and down completely randomly.

Pair Corralation between Alaska Air and Evolution Mining

Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.27 times more return on investment than Evolution Mining. However, Alaska Air is 1.27 times more volatile than Evolution Mining Limited. It trades about 0.28 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.01 per unit of risk. If you would invest  4,041  in Alaska Air Group on September 29, 2024 and sell it today you would earn a total of  2,319  from holding Alaska Air Group or generate 57.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Alaska Air Group  vs.  Evolution Mining Limited

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 102030405060
JavaScript chart by amCharts 3.21.15ALK WE7
       Timeline  
Alaska Air Group 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec404550556065
Evolution Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Evolution Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.72.82.933.13.2

Alaska Air and Evolution Mining Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.78-5.83-3.87-1.920.03262.264.556.849.14 0.010.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15ALK WE7
       Returns  

Pair Trading with Alaska Air and Evolution Mining

The main advantage of trading using opposite Alaska Air and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air 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 Alaska Air Group 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.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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