Correlation Between Silvercorp Metals and Targa Resources

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

Diversification Opportunities for Silvercorp Metals and Targa Resources

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Silvercorp and Targa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Targa Resources go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Targa Resources

Assuming the 90 days trading horizon Silvercorp Metals is expected to generate 2.84 times less return on investment than Targa Resources. In addition to that, Silvercorp Metals is 2.15 times more volatile than Targa Resources Corp. It trades about 0.04 of its total potential returns per unit of risk. Targa Resources Corp is currently generating about 0.22 per unit of volatility. If you would invest  8,426  in Targa Resources Corp on September 12, 2024 and sell it today you would earn a total of  10,101  from holding Targa Resources Corp or generate 119.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.8%
ValuesDaily Returns

Silvercorp Metals  vs.  Targa Resources Corp

 Performance 
       Timeline  
Silvercorp Metals 

Risk-Adjusted Performance

0 of 100

 
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 comparatively stable basic indicators, Silvercorp Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Targa Resources Corp 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Targa Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Targa Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Silvercorp Metals and Targa Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silvercorp Metals and Targa Resources

The main advantage of trading using opposite Silvercorp Metals and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silvercorp Metals position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.
The idea behind Silvercorp Metals and Targa Resources Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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