Correlation Between Origin Materials and Evolution Mining

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

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

Diversification Opportunities for Origin Materials and Evolution Mining

0.46

Correlation Coefficient

Origin Materials  Evolution Mining

Very weak diversification

The 3 months correlation between Origin and Evolution is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Origin Materials 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 Origin Materials 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 Origin Materials i.e., Origin Materials and Evolution Mining go up and down completely randomly.

Pair Corralation between Origin Materials and Evolution Mining

Given the investment horizon of 90 days Origin Materials is expected to under-perform the Evolution Mining. In addition to that, Origin Materials is 1.84 times more volatile than Evolution Mining. It trades about -0.01 of its total potential returns per unit of risk. Evolution Mining is currently generating about -0.02 per unit of volatility. If you would invest  326.00  in Evolution Mining on October 12, 2024 and sell it today you would lose (6.00) from holding Evolution Mining or give up 1.84% of portfolio value over 90 days.

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

Origin Materials  vs.  Evolution Mining

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Origin Materials and Evolution Mining

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

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.