Correlation Between CeoTronics and Evolution Mining

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

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

Diversification Opportunities for CeoTronics and Evolution Mining

0.55

Correlation Coefficient

CeoTronics  Evolution Mining

Very weak diversification

The 3 months correlation between CeoTronics and Evolution is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and CeoTronics 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 CeoTronics AG 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 CeoTronics i.e., CeoTronics and Evolution Mining go up and down completely randomly.

Pair Corralation between CeoTronics and Evolution Mining

Assuming the 90 days trading horizon CeoTronics is expected to generate 1.15 times less return on investment than Evolution Mining. In addition to that, CeoTronics is 1.21 times more volatile than Evolution Mining Limited. It trades about 0.13 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.17 per unit of volatility. If you would invest  248.00  in Evolution Mining Limited on September 3, 2024 and sell it today you would earn a total of  67.00  from holding Evolution Mining Limited or generate 27.02% return on investment over 90 days.

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

CeoTronics AG  vs.  Evolution Mining Limited

CeoTronics AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 13 (%) 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 CeoTronics and Evolution Mining

The main advantage of trading using opposite CeoTronics and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics 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 CeoTronics AG 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.