Correlation Between Evolution Mining and Hawkins

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

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

Diversification Opportunities for Evolution Mining and Hawkins

-0.07

Correlation Coefficient

Evolution Mining  Hawkins

Good diversification

The 3 months correlation between Evolution and Hawkins is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Evolution Mining i.e., Evolution Mining and Hawkins go up and down completely randomly.

Pair Corralation between Evolution Mining and Hawkins

Assuming the 90 days horizon Evolution Mining is expected to generate 1.17 times less return on investment than Hawkins. In addition to that, Evolution Mining is 1.23 times more volatile than Hawkins. It trades about 0.02 of its total potential returns per unit of risk. Hawkins is currently generating about 0.03 per unit of volatility. If you would invest  11,984  in Hawkins on September 23, 2024 and sell it today you would earn a total of  414.00  from holding Hawkins or generate 3.45% return on investment over 90 days.

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

Evolution Mining  vs.  Hawkins

Evolution Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hawkins

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolution Mining and Hawkins

The main advantage of trading using opposite Evolution Mining and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.

The idea behind Evolution Mining and Hawkins 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.