Correlation Between Ebro Foods and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Silvercorp Metals 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 Ebro Foods and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Silvercorp Metals, you can compare the effects of market volatilities on Ebro Foods and Silvercorp Metals 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 Ebro Foods with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Silvercorp Metals.
Diversification Opportunities for Ebro Foods and Silvercorp Metals
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ebro and Silvercorp is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Ebro Foods 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 Ebro Foods are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Ebro Foods i.e., Ebro Foods and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Ebro Foods and Silvercorp Metals
Assuming the 90 days trading horizon Ebro Foods is expected to generate 19.8 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, Ebro Foods is 3.21 times less risky than Silvercorp Metals. It trades about 0.03 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 435.00 in Silvercorp Metals on October 24, 2024 and sell it today you would earn a total of 21.00 from holding Silvercorp Metals or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Ebro Foods vs. Silvercorp Metals
Performance |
| Timeline |
| Ebro Foods |
| Silvercorp Metals |
Ebro Foods and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Silvercorp Metals
The main advantage of trading using opposite Ebro Foods and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Silvercorp Metals 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.| Ebro Foods vs. Roadside Real Estate | Ebro Foods vs. Bell Food Group | Ebro Foods vs. Grieg Seafood | Ebro Foods vs. Virgin Wines UK |
| Silvercorp Metals vs. Datalogic | Silvercorp Metals vs. Check Point Software | Silvercorp Metals vs. Alfa Financial Software | Silvercorp Metals vs. Ebro Foods |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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