Correlation Between Big Ridge and Evolution Mining

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

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

Diversification Opportunities for Big Ridge and Evolution Mining

0.62

Correlation Coefficient

Big Ridge  Evolution Mining

Poor diversification

The 3 months correlation between Big and Evolution is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Big Ridge 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 Big Ridge Gold 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 Big Ridge i.e., Big Ridge and Evolution Mining go up and down completely randomly.

Pair Corralation between Big Ridge and Evolution Mining

Assuming the 90 days horizon Big Ridge Gold is expected to under-perform the Evolution Mining. In addition to that, Big Ridge is 2.35 times more volatile than Evolution Mining. It trades about -0.07 of its total potential returns per unit of risk. Evolution Mining is currently generating about -0.03 per unit of volatility. If you would invest  315.00  in Evolution Mining on October 1, 2024 and sell it today you would lose (15.00) from holding Evolution Mining or give up 4.76% of portfolio value over 90 days.

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

Big Ridge Gold  vs.  Evolution Mining

Big Ridge Gold

Risk-Adjusted Performance

0 of 100

Weak

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

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 Big Ridge and Evolution Mining

The main advantage of trading using opposite Big Ridge and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge 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 Big Ridge Gold 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.