Correlation Between Evolution Mining and ENN Energy

Can any of the company-specific risk be diversified away by investing in both Evolution Mining and ENN Energy 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 ENN Energy 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 ENN Energy Holdings, you can compare the effects of market volatilities on Evolution Mining and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and ENN Energy.

Diversification Opportunities for Evolution Mining and ENN Energy

0.7

Correlation Coefficient

Evolution Mining  ENN Energy

Poor diversification

The 3 months correlation between Evolution and ENN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining Limited and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Evolution Mining i.e., Evolution Mining and ENN Energy go up and down completely randomly.

Pair Corralation between Evolution Mining and ENN Energy

Assuming the 90 days horizon Evolution Mining is expected to generate 1.68 times less return on investment than ENN Energy. But when comparing it to its historical volatility, Evolution Mining Limited is 1.42 times less risky than ENN Energy. It trades about 0.06 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  402.00  in ENN Energy Holdings on September 12, 2024 and sell it today you would earn a total of  283.00  from holding ENN Energy Holdings or generate 70.4% 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.  ENN Energy Holdings

Evolution Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 12 (%) 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.

ENN Energy Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Mining and ENN Energy

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

The idea behind Evolution Mining Limited and ENN Energy Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..