Correlation Between Flexible Solutions and Evolution Mining

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

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

Diversification Opportunities for Flexible Solutions and Evolution Mining

0.31

Correlation Coefficient

Flexible Solutions  Evolution Mining

Weak diversification

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

Pair Corralation between Flexible Solutions and Evolution Mining

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 0.82 times more return on investment than Evolution Mining. However, Flexible Solutions International is 1.22 times less risky than Evolution Mining. It trades about -0.29 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.28 per unit of risk. If you would invest  402.00  in Flexible Solutions International on September 23, 2024 and sell it today you would lose (47.00) from holding Flexible Solutions International or give up 11.69% of portfolio value over 90 days.

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

Flexible Solutions Internation  vs.  Evolution Mining

Flexible Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Flexible Solutions is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Flexible Solutions and Evolution Mining

The main advantage of trading using opposite Flexible Solutions and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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 Flexible Solutions International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.