Correlation Between Evolution and CDON AB

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

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

Diversification Opportunities for Evolution and CDON AB

0.12

Correlation Coefficient

Evolution  CDON AB

Average diversification

The 3 months correlation between Evolution and CDON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and CDON AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDON AB and Evolution 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 AB are associated (or correlated) with CDON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDON AB has no effect on the direction of Evolution i.e., Evolution and CDON AB go up and down completely randomly.

Pair Corralation between Evolution and CDON AB

Assuming the 90 days trading horizon Evolution is expected to generate 2.84 times less return on investment than CDON AB. But when comparing it to its historical volatility, Evolution AB is 1.94 times less risky than CDON AB. It trades about 0.06 of its potential returns per unit of risk. CDON AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,950  in CDON AB on April 24, 2025 and sell it today you would earn a total of  1,270  from holding CDON AB or generate 25.66% return on investment over 90 days.

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

Evolution AB  vs.  CDON AB

Evolution AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Evolution may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CDON AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDON AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CDON AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution and CDON AB

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

The idea behind Evolution AB and CDON AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.