Correlation Between Evolution and Flexion Mobile

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

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

Diversification Opportunities for Evolution and Flexion Mobile

-0.05

Correlation Coefficient

Evolution  Flexion Mobile

Good diversification

The 3 months correlation between Evolution and Flexion is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Flexion Mobile PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexion Mobile PLC and Evolution 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 AB are associated (or correlated) with Flexion Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexion Mobile PLC has no effect on the direction of Evolution i.e., Evolution and Flexion Mobile go up and down completely randomly.

Pair Corralation between Evolution and Flexion Mobile

Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Flexion Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.02 times less risky than Flexion Mobile. The stock trades about -0.04 of its potential returns per unit of risk. The Flexion Mobile PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  782.00  in Flexion Mobile PLC on September 24, 2024 and sell it today you would lose (32.00) from holding Flexion Mobile PLC or give up 4.09% of portfolio value over 90 days.

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

Evolution AB  vs.  Flexion Mobile PLC

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Flexion Mobile PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evolution and Flexion Mobile

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

The idea behind Evolution AB and Flexion Mobile PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..