Correlation Between Evergold Corp and Prime Mining

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

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

Diversification Opportunities for Evergold Corp and Prime Mining

0.39

Correlation Coefficient

Evergold Corp  Prime Mining

Weak diversification

The 3 months correlation between Evergold and Prime is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Evergold Corp and Prime Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Mining Corp and Evergold Corp 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 Evergold Corp are associated (or correlated) with Prime Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Mining Corp has no effect on the direction of Evergold Corp i.e., Evergold Corp and Prime Mining go up and down completely randomly.

Pair Corralation between Evergold Corp and Prime Mining

Assuming the 90 days horizon Evergold Corp is expected to generate 3.68 times more return on investment than Prime Mining. However, Evergold Corp is 3.68 times more volatile than Prime Mining Corp. It trades about 0.08 of its potential returns per unit of risk. Prime Mining Corp is currently generating about -0.01 per unit of risk. If you would invest  2.10  in Evergold Corp on October 21, 2024 and sell it today you would lose (0.60) from holding Evergold Corp or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Evergold Corp  vs.  Prime Mining Corp

Evergold Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evergold Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Prime Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Evergold Corp and Prime Mining

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

The idea behind Evergold Corp and Prime Mining 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .