Correlation Between Evolution Mining and Dundee Precious

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

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

Diversification Opportunities for Evolution Mining and Dundee Precious

0.41

Correlation Coefficient

Evolution Mining  Dundee Precious

Very weak diversification

The 3 months correlation between Evolution and Dundee is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals and Evolution Mining 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 Evolution Mining are associated (or correlated) with Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Evolution Mining i.e., Evolution Mining and Dundee Precious go up and down completely randomly.

Pair Corralation between Evolution Mining and Dundee Precious

Assuming the 90 days horizon Evolution Mining is expected to generate 1.95 times more return on investment than Dundee Precious. However, Evolution Mining is 1.95 times more volatile than Dundee Precious Metals. It trades about 0.12 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.02 per unit of risk. If you would invest  260.00  in Evolution Mining on September 4, 2024 and sell it today you would earn a total of  62.00  from holding Evolution Mining or generate 23.85% return on investment over 90 days.

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

Evolution Mining  vs.  Dundee Precious Metals

Evolution Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Dundee Precious Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dundee Precious Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Dundee Precious is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Evolution Mining and Dundee Precious

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

The idea behind Evolution Mining and Dundee Precious Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.