Correlation Between Evolution Mining and First Graphene
Can any of the company-specific risk be diversified away by investing in both Evolution Mining and First Graphene 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 First Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Mining and First Graphene, you can compare the effects of market volatilities on Evolution Mining and First Graphene 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 First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and First Graphene.
Diversification Opportunities for Evolution Mining and First Graphene
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evolution and First is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene 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 First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Evolution Mining i.e., Evolution Mining and First Graphene go up and down completely randomly.
Pair Corralation between Evolution Mining and First Graphene
Assuming the 90 days trading horizon Evolution Mining is expected to generate 0.58 times more return on investment than First Graphene. However, Evolution Mining is 1.72 times less risky than First Graphene. It trades about -0.08 of its potential returns per unit of risk. First Graphene is currently generating about -0.31 per unit of risk. If you would invest 514.00 in Evolution Mining on September 5, 2024 and sell it today you would lose (25.00) from holding Evolution Mining or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Mining vs. First Graphene
Performance |
| Timeline |
| Evolution Mining |
| First Graphene |
Evolution Mining and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Mining and First Graphene
The main advantage of trading using opposite Evolution Mining and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, First Graphene 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 First Graphene will offset losses from the drop in First Graphene's long position.| Evolution Mining vs. Northern Star Resources | Evolution Mining vs. Sandfire Resources NL | Evolution Mining vs. Aneka Tambang Tbk |
| First Graphene vs. Autosports Group | First Graphene vs. Falcon Metals | First Graphene vs. Homeco Daily Needs | First Graphene vs. Carawine Resources Limited |
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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