Correlation Between Evolution Petroleum and Kolibri Global

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

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

Diversification Opportunities for Evolution Petroleum and Kolibri Global

0.48

Correlation Coefficient

Evolution Petroleum  Kolibri Global

Very weak diversification

The 3 months correlation between Evolution and Kolibri is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum and Kolibri Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolibri Global Energy and Evolution Petroleum 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 Petroleum are associated (or correlated) with Kolibri Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolibri Global Energy has no effect on the direction of Evolution Petroleum i.e., Evolution Petroleum and Kolibri Global go up and down completely randomly.

Pair Corralation between Evolution Petroleum and Kolibri Global

If you would invest  490.00  in Evolution Petroleum on September 1, 2024 and sell it today you would earn a total of  96.00  from holding Evolution Petroleum or generate 19.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Evolution Petroleum  vs.  Kolibri Global Energy

Evolution Petroleum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Petroleum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Evolution Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Kolibri Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evolution Petroleum and Kolibri Global

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

The idea behind Evolution Petroleum and Kolibri Global Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.