Correlation Between Cyclone Metals and Evolution Mining

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

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

Diversification Opportunities for Cyclone Metals and Evolution Mining

0.11

Correlation Coefficient

Cyclone Metals  Evolution Mining

Average diversification

The 3 months correlation between Cyclone and Evolution is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cyclone Metals Limited and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Cyclone Metals 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 Cyclone Metals Limited 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 Cyclone Metals i.e., Cyclone Metals and Evolution Mining go up and down completely randomly.

Pair Corralation between Cyclone Metals and Evolution Mining

Assuming the 90 days trading horizon Cyclone Metals Limited is expected to generate 5.82 times more return on investment than Evolution Mining. However, Cyclone Metals is 5.82 times more volatile than Evolution Mining. It trades about 0.3 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.07 per unit of risk. If you would invest  2.40  in Cyclone Metals Limited on September 22, 2024 and sell it today you would earn a total of  2.40  from holding Cyclone Metals Limited or generate 100.0% return on investment over 90 days.

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

Cyclone Metals Limited  vs.  Evolution Mining

Cyclone Metals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclone Metals Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Cyclone Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cyclone Metals and Evolution Mining

The main advantage of trading using opposite Cyclone Metals and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyclone Metals 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 Cyclone Metals Limited and Evolution Mining 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.