Correlation Between Andean Silver and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Andean Silver and Southern Cross 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 Andean Silver and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andean Silver Limited and Southern Cross Gold, you can compare the effects of market volatilities on Andean Silver and Southern Cross 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 Andean Silver with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andean Silver and Southern Cross.
Diversification Opportunities for Andean Silver and Southern Cross
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Andean and Southern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Andean Silver Limited and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Andean Silver 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 Andean Silver Limited are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Andean Silver i.e., Andean Silver and Southern Cross go up and down completely randomly.
Pair Corralation between Andean Silver and Southern Cross
Assuming the 90 days trading horizon Andean Silver Limited is expected to under-perform the Southern Cross. But the stock apears to be less risky and, when comparing its historical volatility, Andean Silver Limited is 1.41 times less risky than Southern Cross. The stock trades about -0.25 of its potential returns per unit of risk. The Southern Cross Gold is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 317.00 in Southern Cross Gold on September 3, 2024 and sell it today you would lose (21.00) from holding Southern Cross Gold or give up 6.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Andean Silver Limited vs. Southern Cross Gold
Performance |
| Timeline |
| Andean Silver Limited |
| Southern Cross Gold |
Andean Silver and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andean Silver and Southern Cross
The main advantage of trading using opposite Andean Silver and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andean Silver position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Andean Silver vs. Northern Star Resources | Andean Silver vs. Evolution Mining | Andean Silver vs. Bluescope Steel | Andean Silver vs. Aneka Tambang Tbk |
| Southern Cross vs. Aspire Mining | Southern Cross vs. COAST ENTERTAINMENT HOLDINGS | Southern Cross vs. ABACUS STORAGE KING | Southern Cross vs. Andean Silver Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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