Correlation Between Evolution Mining and Resolute Mining

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

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

Diversification Opportunities for Evolution Mining and Resolute Mining

-0.02

Correlation Coefficient

Evolution Mining  Resolute Mining

Good diversification

The 3 months correlation between Evolution and Resolute is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Resolute Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resolute Mining 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 Resolute Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resolute Mining has no effect on the direction of Evolution Mining i.e., Evolution Mining and Resolute Mining go up and down completely randomly.

Pair Corralation between Evolution Mining and Resolute Mining

Assuming the 90 days trading horizon Evolution Mining is expected to generate 0.43 times more return on investment than Resolute Mining. However, Evolution Mining is 2.33 times less risky than Resolute Mining. It trades about 0.14 of its potential returns per unit of risk. Resolute Mining is currently generating about -0.14 per unit of risk. If you would invest  432.00  in Evolution Mining on September 13, 2024 and sell it today you would earn a total of  89.00  from holding Evolution Mining or generate 20.6% return on investment over 90 days.

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

Evolution Mining  vs.  Resolute Mining

Evolution Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evolution Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Resolute Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resolute Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Evolution Mining and Resolute Mining

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

The idea behind Evolution Mining and Resolute 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.