Correlation Between Evolution Mining and Eldorado Gold

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

By analyzing existing cross correlation between Evolution Mining and Eldorado Gold Corp, you can compare the effects of market volatilities on Evolution Mining and Eldorado Gold 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 Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Eldorado Gold.

Diversification Opportunities for Evolution Mining and Eldorado Gold

-0.4

Correlation Coefficient

Evolution Mining  Eldorado Gold

Very good diversification

The 3 months correlation between Evolution and Eldorado is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Evolution Mining i.e., Evolution Mining and Eldorado Gold go up and down completely randomly.

Pair Corralation between Evolution Mining and Eldorado Gold

Assuming the 90 days horizon Evolution Mining is expected to generate 1.37 times more return on investment than Eldorado Gold. However, Evolution Mining is 1.37 times more volatile than Eldorado Gold Corp. It trades about 0.19 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.03 per unit of risk. If you would invest  285.00  in Evolution Mining on December 22, 2024 and sell it today you would earn a total of  141.00  from holding Evolution Mining or generate 49.47% return on investment over 90 days.

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

Evolution Mining  vs.  Eldorado Gold Corp

Evolution Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 14 (%) 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.

Eldorado Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolution Mining and Eldorado Gold

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

The idea behind Evolution Mining and Eldorado Gold Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.