Correlation Between Humatech and Evolution Mining

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

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

Diversification Opportunities for Humatech and Evolution Mining

0.19

Correlation Coefficient

Humatech  Evolution Mining

Average diversification

The 3 months correlation between Humatech and Evolution is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Humatech and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Humatech 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 Humatech 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 Humatech i.e., Humatech and Evolution Mining go up and down completely randomly.

Pair Corralation between Humatech and Evolution Mining

Given the investment horizon of 90 days Humatech is expected to generate 37.88 times more return on investment than Evolution Mining. However, Humatech is 37.88 times more volatile than Evolution Mining. It trades about 0.13 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.08 per unit of risk. If you would invest  0.01  in Humatech on September 13, 2024 and sell it today you would earn a total of  0.17  from holding Humatech or generate 1700.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Humatech  vs.  Evolution Mining

Humatech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Humatech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady primary indicators, Humatech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humatech and Evolution Mining

The main advantage of trading using opposite Humatech and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humatech 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 Humatech 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.