Correlation Between Emeco Holdings and Evolution Mining

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

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

Diversification Opportunities for Emeco Holdings and Evolution Mining

-0.04

Correlation Coefficient

Emeco Holdings  Evolution Mining

Good diversification

The 3 months correlation between Emeco and Evolution is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Emeco Holdings and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Emeco Holdings 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 Emeco Holdings 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 Emeco Holdings i.e., Emeco Holdings and Evolution Mining go up and down completely randomly.

Pair Corralation between Emeco Holdings and Evolution Mining

Assuming the 90 days trading horizon Emeco Holdings is expected to generate 0.64 times more return on investment than Evolution Mining. However, Emeco Holdings is 1.56 times less risky than Evolution Mining. It trades about -0.04 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.06 per unit of risk. If you would invest  90.00  in Emeco Holdings on October 10, 2024 and sell it today you would lose (1.00) from holding Emeco Holdings or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Emeco Holdings  vs.  Evolution Mining

Emeco Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emeco Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Emeco Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Emeco Holdings and Evolution Mining

The main advantage of trading using opposite Emeco Holdings and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeco Holdings 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 Emeco Holdings 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 Stocks Directory module to find actively traded stocks across global markets.