Correlation Between Gol Intelligent and Evolution Mining

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

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

Diversification Opportunities for Gol Intelligent and Evolution Mining

0.0

Correlation Coefficient

Gol Intelligent  Evolution Mining

Pay attention - limited upside

The 3 months correlation between Gol and Evolution is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Gol Intelligent 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 Gol Intelligent Airlines are associated (or correlated) with Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Gol Intelligent i.e., Gol Intelligent and Evolution Mining go up and down completely randomly.

Pair Corralation between Gol Intelligent and Evolution Mining

Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to under-perform the Evolution Mining. In addition to that, Gol Intelligent is 2.79 times more volatile than Evolution Mining Limited. It trades about 0.0 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.05 per unit of volatility. If you would invest  173.00  in Evolution Mining Limited on September 20, 2024 and sell it today you would earn a total of  122.00  from holding Evolution Mining Limited or generate 70.52% return on investment over 90 days.

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

Gol Intelligent Airlines  vs.  Evolution Mining Limited

Gol Intelligent Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gol Intelligent and Evolution Mining

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

The idea behind Gol Intelligent Airlines and Evolution Mining Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.