Correlation Between Silvercorp Metals and Ross Stores

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Can any of the company-specific risk be diversified away by investing in both Silvercorp Metals and Ross Stores 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 Silvercorp Metals and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silvercorp Metals and Ross Stores, you can compare the effects of market volatilities on Silvercorp Metals and Ross Stores 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 Silvercorp Metals with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silvercorp Metals and Ross Stores.

Diversification Opportunities for Silvercorp Metals and Ross Stores

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Silvercorp and Ross is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Silvercorp Metals 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 Silvercorp Metals are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Ross Stores go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Ross Stores

Assuming the 90 days trading horizon Silvercorp Metals is expected to generate 2.37 times more return on investment than Ross Stores. However, Silvercorp Metals is 2.37 times more volatile than Ross Stores. It trades about 0.02 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of risk. If you would invest  405.00  in Silvercorp Metals on September 20, 2024 and sell it today you would earn a total of  29.00  from holding Silvercorp Metals or generate 7.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy89.34%
ValuesDaily Returns

Silvercorp Metals  vs.  Ross Stores

 Performance 
       Timeline  
Silvercorp Metals 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Silvercorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Ross Stores 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Silvercorp Metals and Ross Stores Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silvercorp Metals and Ross Stores

The main advantage of trading using opposite Silvercorp Metals and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silvercorp Metals position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.
The idea behind Silvercorp Metals and Ross Stores 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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