Correlation Between Evolution Mining and Siemens Energy

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Can any of the company-specific risk be diversified away by investing in both Evolution Mining and Siemens Energy 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 Evolution Mining and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Mining Limited and Siemens Energy AG, you can compare the effects of market volatilities on Evolution Mining and Siemens Energy 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 Evolution Mining with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Siemens Energy.

Diversification Opportunities for Evolution Mining and Siemens Energy

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Evolution and Siemens is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining Limited and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and Evolution Mining 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 Evolution Mining Limited are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of Evolution Mining i.e., Evolution Mining and Siemens Energy go up and down completely randomly.

Pair Corralation between Evolution Mining and Siemens Energy

Assuming the 90 days horizon Evolution Mining Limited is expected to under-perform the Siemens Energy. But the stock apears to be less risky and, when comparing its historical volatility, Evolution Mining Limited is 1.05 times less risky than Siemens Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Siemens Energy AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,942  in Siemens Energy AG on September 26, 2024 and sell it today you would earn a total of  158.00  from holding Siemens Energy AG or generate 3.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Evolution Mining Limited  vs.  Siemens Energy AG

 Performance 
       Timeline  
Evolution Mining 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Siemens Energy AG 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Siemens Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining and Siemens Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evolution Mining and Siemens Energy

The main advantage of trading using opposite Evolution Mining and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, Siemens Energy 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 Siemens Energy will offset losses from the drop in Siemens Energy's long position.
The idea behind Evolution Mining Limited and Siemens Energy AG 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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