Correlation Between Maple Gold and Evolution Mining

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

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

Diversification Opportunities for Maple Gold and Evolution Mining

0.35

Correlation Coefficient

Maple Gold  Evolution Mining

Weak diversification

The 3 months correlation between Maple and Evolution is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Maple Gold Mines and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Maple Gold 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 Maple Gold Mines 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 Maple Gold i.e., Maple Gold and Evolution Mining go up and down completely randomly.

Pair Corralation between Maple Gold and Evolution Mining

Assuming the 90 days horizon Maple Gold Mines is expected to generate 1.9 times more return on investment than Evolution Mining. However, Maple Gold is 1.9 times more volatile than Evolution Mining. It trades about 0.0 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.02 per unit of risk. If you would invest  4.00  in Maple Gold Mines on October 9, 2024 and sell it today you would lose (0.10) from holding Maple Gold Mines or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Maple Gold Mines  vs.  Evolution Mining

Maple Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Gold Mines 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 essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly unfluctuating basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Maple Gold and Evolution Mining

The main advantage of trading using opposite Maple Gold and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Gold 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 Maple Gold Mines and Evolution 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.