Correlation Between Revival Gold and Evolution Mining

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

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

Diversification Opportunities for Revival Gold and Evolution Mining

0.47

Correlation Coefficient

Revival Gold  Evolution Mining

Very weak diversification

The 3 months correlation between Revival and Evolution is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Revival Gold 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 Revival Gold 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 Revival Gold i.e., Revival Gold and Evolution Mining go up and down completely randomly.

Pair Corralation between Revival Gold and Evolution Mining

Assuming the 90 days horizon Revival Gold is expected to generate 12.06 times less return on investment than Evolution Mining. In addition to that, Revival Gold is 1.47 times more volatile than Evolution Mining. It trades about 0.02 of its total potential returns per unit of risk. Evolution Mining is currently generating about 0.29 per unit of volatility. If you would invest  285.00  in Evolution Mining on September 13, 2024 and sell it today you would earn a total of  41.00  from holding Evolution Mining or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Revival Gold  vs.  Evolution Mining

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Revival Gold and Evolution Mining

The main advantage of trading using opposite Revival Gold and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revival Gold 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 Revival Gold 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.