Correlation Between GOLD ROAD and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Silvercorp Metals, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Silvercorp Metals.
Diversification Opportunities for GOLD ROAD and Silvercorp Metals
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOLD and Silvercorp is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and Silvercorp Metals go up and down completely randomly.
Pair Corralation between GOLD ROAD and Silvercorp Metals
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 0.74 times more return on investment than Silvercorp Metals. However, GOLD ROAD RES is 1.35 times less risky than Silvercorp Metals. It trades about 0.18 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.23 per unit of risk. If you would invest 109.00 in GOLD ROAD RES on September 20, 2024 and sell it today you would earn a total of 13.00 from holding GOLD ROAD RES or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. Silvercorp Metals
Performance |
| Timeline |
| GOLD ROAD RES |
| Silvercorp Metals |
GOLD ROAD and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Silvercorp Metals
The main advantage of trading using opposite GOLD ROAD and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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 GOLD ROAD RES 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.| Silvercorp Metals vs. Superior Plus Corp | Silvercorp Metals vs. NMI Holdings | Silvercorp Metals vs. SIVERS SEMICONDUCTORS AB | Silvercorp Metals vs. NorAm Drilling AS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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