Correlation Between Evolution Mining and Nufarm

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

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

Diversification Opportunities for Evolution Mining and Nufarm

-0.06

Correlation Coefficient

Evolution Mining  Nufarm

Good diversification

The 3 months correlation between Evolution and Nufarm is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Nufarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm and Evolution Mining 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 Evolution Mining are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm has no effect on the direction of Evolution Mining i.e., Evolution Mining and Nufarm go up and down completely randomly.

Pair Corralation between Evolution Mining and Nufarm

Assuming the 90 days trading horizon Evolution Mining is expected to generate 1.49 times more return on investment than Nufarm. However, Evolution Mining is 1.49 times more volatile than Nufarm. It trades about 0.05 of its potential returns per unit of risk. Nufarm is currently generating about -0.05 per unit of risk. If you would invest  310.00  in Evolution Mining on September 26, 2024 and sell it today you would earn a total of  174.00  from holding Evolution Mining or generate 56.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Evolution Mining  vs.  Nufarm

Evolution Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Evolution Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nufarm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nufarm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Evolution Mining and Nufarm

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

The idea behind Evolution Mining and Nufarm 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.