Correlation Between AUST AGRICULTURAL and Evolution Mining

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

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

Diversification Opportunities for AUST AGRICULTURAL and Evolution Mining

-0.31

Correlation Coefficient

AUST AGRICULTURAL  Evolution Mining

Very good diversification

The 3 months correlation between AUST and Evolution is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Evolution Mining go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and Evolution Mining

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the Evolution Mining. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 1.98 times less risky than Evolution Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Evolution Mining Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Evolution Mining Limited on September 22, 2024 and sell it today you would earn a total of  16.00  from holding Evolution Mining Limited or generate 6.04% return on investment over 90 days.

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

AUST AGRICULTURAL  vs.  Evolution Mining Limited

AUST AGRICULTURAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUST AGRICULTURAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AUST AGRICULTURAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Evolution Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AUST AGRICULTURAL and Evolution Mining

The main advantage of trading using opposite AUST AGRICULTURAL and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL 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 AUST AGRICULTURAL and Evolution Mining Limited 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.