Correlation Between Caledonia Mining and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Silvercorp Metals, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Silvercorp Metals.
Diversification Opportunities for Caledonia Mining and Silvercorp Metals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caledonia and Silvercorp is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Caledonia Mining and Silvercorp Metals
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 17.45 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, Caledonia Mining is 1.61 times less risky than Silvercorp Metals. It trades about 0.0 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 361.00 in Silvercorp Metals on September 4, 2024 and sell it today you would earn a total of 94.00 from holding Silvercorp Metals or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Caledonia Mining vs. Silvercorp Metals
Performance |
| Timeline |
| Caledonia Mining |
| Silvercorp Metals |
Caledonia Mining and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Silvercorp Metals
The main advantage of trading using opposite Caledonia Mining and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Atalaya Mining | Caledonia Mining vs. Ferrexpo PLC |
| Silvercorp Metals vs. Samsung Electronics Co | Silvercorp Metals vs. Samsung Electronics Co | Silvercorp Metals vs. Hyundai Motor | Silvercorp Metals vs. Toyota Motor Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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