Correlation Between Evolution and Stillfront Group

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

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

Diversification Opportunities for Evolution and Stillfront Group

0.61

Correlation Coefficient

Evolution  Stillfront Group

Poor diversification

The 3 months correlation between Evolution and Stillfront is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Stillfront Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stillfront Group and Evolution 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 AB are associated (or correlated) with Stillfront Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stillfront Group has no effect on the direction of Evolution i.e., Evolution and Stillfront Group go up and down completely randomly.

Pair Corralation between Evolution and Stillfront Group

Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Stillfront Group. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.54 times less risky than Stillfront Group. The stock trades about -0.06 of its potential returns per unit of risk. The Stillfront Group AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  721.00  in Stillfront Group AB on August 31, 2024 and sell it today you would earn a total of  13.00  from holding Stillfront Group AB or generate 1.8% return on investment over 90 days.

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

Evolution AB  vs.  Stillfront Group AB

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Stillfront Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillfront Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stillfront Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evolution and Stillfront Group

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

The idea behind Evolution AB and Stillfront Group AB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..