Correlation Between B2Gold Corp and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both B2Gold Corp 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 B2Gold Corp and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B2Gold Corp and Silvercorp Metals, you can compare the effects of market volatilities on B2Gold Corp 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 B2Gold Corp with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and Silvercorp Metals.
Diversification Opportunities for B2Gold Corp and Silvercorp Metals
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between B2Gold and Silvercorp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and B2Gold Corp 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 B2Gold Corp 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 B2Gold Corp i.e., B2Gold Corp and Silvercorp Metals go up and down completely randomly.
Pair Corralation between B2Gold Corp and Silvercorp Metals
Considering the 90-day investment horizon B2Gold Corp is expected to generate 0.79 times more return on investment than Silvercorp Metals. However, B2Gold Corp is 1.27 times less risky than Silvercorp Metals. It trades about 0.02 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.03 per unit of risk. If you would invest 277.00 in B2Gold Corp on August 28, 2024 and sell it today you would earn a total of 8.00 from holding B2Gold Corp or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B2Gold Corp vs. Silvercorp Metals
Performance |
| Timeline |
| B2Gold Corp |
| Silvercorp Metals |
B2Gold Corp and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B2Gold Corp and Silvercorp Metals
The main advantage of trading using opposite B2Gold Corp and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp 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.The idea behind B2Gold Corp and Silvercorp Metals 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.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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