Correlation Between Evolution Mining and Aurum Resources
Can any of the company-specific risk be diversified away by investing in both Evolution Mining and Aurum Resources 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 Aurum Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Mining and Aurum Resources, you can compare the effects of market volatilities on Evolution Mining and Aurum Resources 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 Aurum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Aurum Resources.
Diversification Opportunities for Evolution Mining and Aurum Resources
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evolution and Aurum is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Aurum Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurum Resources 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 are associated (or correlated) with Aurum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurum Resources has no effect on the direction of Evolution Mining i.e., Evolution Mining and Aurum Resources go up and down completely randomly.
Pair Corralation between Evolution Mining and Aurum Resources
Assuming the 90 days trading horizon Evolution Mining is expected to generate 1.98 times less return on investment than Aurum Resources. But when comparing it to its historical volatility, Evolution Mining is 1.97 times less risky than Aurum Resources. It trades about 0.06 of its potential returns per unit of risk. Aurum Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Aurum Resources on August 26, 2024 and sell it today you would earn a total of 25.00 from holding Aurum Resources or generate 147.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Mining vs. Aurum Resources
Performance |
| Timeline |
| Evolution Mining |
| Aurum Resources |
Evolution Mining and Aurum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Mining and Aurum Resources
The main advantage of trading using opposite Evolution Mining and Aurum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, Aurum Resources 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 Aurum Resources will offset losses from the drop in Aurum Resources' long position.| Evolution Mining vs. Oneview Healthcare PLC | Evolution Mining vs. Nova Eye Medical | Evolution Mining vs. Aeon Metals | Evolution Mining vs. GreenX Metals |
| Aurum Resources vs. ARN Media Limited | Aurum Resources vs. Pioneer Credit | Aurum Resources vs. BSP Financial Group | Aurum Resources vs. Skycity Entertainment Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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