Correlation Between Super Retail and Evolution Mining

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

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

Diversification Opportunities for Super Retail and Evolution Mining

-0.48

Correlation Coefficient

Super Retail  Evolution Mining

Very good diversification

The 3 months correlation between Super and Evolution is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Super Retail 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 Super Retail Group 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 Super Retail i.e., Super Retail and Evolution Mining go up and down completely randomly.

Pair Corralation between Super Retail and Evolution Mining

Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Evolution Mining. In addition to that, Super Retail is 1.09 times more volatile than Evolution Mining. It trades about -0.09 of its total potential returns per unit of risk. Evolution Mining is currently generating about 0.32 per unit of volatility. If you would invest  480.00  in Evolution Mining on December 23, 2024 and sell it today you would earn a total of  206.00  from holding Evolution Mining or generate 42.92% return on investment over 90 days.

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

Super Retail Group  vs.  Evolution Mining

Super Retail Group

Risk-Adjusted Performance

Very Weak

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

Evolution Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evolution Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Retail and Evolution Mining

The main advantage of trading using opposite Super Retail and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail 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 Super Retail Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..