Correlation Between EVE Health and Galena Mining

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

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

Diversification Opportunities for EVE Health and Galena Mining

1.0

Correlation Coefficient

EVE Health  Galena Mining

No risk reduction

The 3 months correlation between EVE and Galena is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding EVE Health Group and Galena Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galena Mining and EVE Health 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 EVE Health Group are associated (or correlated) with Galena Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galena Mining has no effect on the direction of EVE Health i.e., EVE Health and Galena Mining go up and down completely randomly.

Pair Corralation between EVE Health and Galena Mining

Assuming the 90 days trading horizon EVE Health Group is expected to generate 0.36 times more return on investment than Galena Mining. However, EVE Health Group is 2.8 times less risky than Galena Mining. It trades about -0.05 of its potential returns per unit of risk. Galena Mining is currently generating about -0.05 per unit of risk. If you would invest  0.15  in EVE Health Group on October 3, 2024 and sell it today you would lose (0.05) from holding EVE Health Group or give up 33.33% of portfolio value over 90 days.

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

EVE Health Group  vs.  Galena Mining

EVE Health Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVE Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, EVE Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Galena Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galena Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Galena Mining is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EVE Health and Galena Mining

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

The idea behind EVE Health Group and Galena 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.