Correlation Between Lion One and Evolution Mining

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

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

Diversification Opportunities for Lion One and Evolution Mining

-0.06

Correlation Coefficient

Lion One  Evolution Mining

Good diversification

The 3 months correlation between Lion and Evolution is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Evolution Mining go up and down completely randomly.

Pair Corralation between Lion One and Evolution Mining

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Evolution Mining. In addition to that, Lion One is 2.29 times more volatile than Evolution Mining Limited. It trades about -0.05 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.11 per unit of volatility. If you would invest  265.00  in Evolution Mining Limited on September 16, 2024 and sell it today you would earn a total of  39.00  from holding Evolution Mining Limited or generate 14.72% return on investment over 90 days.

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

Lion One Metals  vs.  Evolution Mining Limited

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Evolution Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Evolution Mining

The main advantage of trading using opposite Lion One and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.