Correlation Between Evolution Mining and Cal Maine

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

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

Diversification Opportunities for Evolution Mining and Cal Maine

0.61

Correlation Coefficient

Evolution Mining  Cal Maine

Poor diversification

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

Pair Corralation between Evolution Mining and Cal Maine

Assuming the 90 days horizon Evolution Mining is expected to generate 4.52 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Evolution Mining Limited is 1.02 times less risky than Cal Maine. It trades about 0.08 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  6,466  in Cal Maine Foods on September 19, 2024 and sell it today you would earn a total of  4,374  from holding Cal Maine Foods or generate 67.65% return on investment over 90 days.

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

Evolution Mining Limited  vs.  Cal Maine Foods

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cal Maine Foods

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Maine Foods are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cal Maine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Mining and Cal Maine

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

The idea behind Evolution Mining Limited and Cal Maine Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.