Correlation Between GoldMining and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Silvercorp Metals, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Silvercorp Metals.
Diversification Opportunities for GoldMining and Silvercorp Metals
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GoldMining and Silvercorp is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Silvercorp Metals go up and down completely randomly.
Pair Corralation between GoldMining and Silvercorp Metals
Given the investment horizon of 90 days GoldMining is expected to generate 0.68 times more return on investment than Silvercorp Metals. However, GoldMining is 1.46 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 -0.44 per unit of risk. If you would invest 94.00 in GoldMining on August 31, 2024 and sell it today you would lose (10.00) from holding GoldMining or give up 10.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoldMining vs. Silvercorp Metals
Performance |
| Timeline |
| GoldMining |
| Silvercorp Metals |
GoldMining and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Silvercorp Metals
The main advantage of trading using opposite GoldMining and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. Gold Royalty Corp | GoldMining vs. Uranium Royalty Corp | GoldMining vs. Metalla Royalty Streaming | GoldMining vs. Equinox Gold Corp |
| Silvercorp Metals vs. Endeavour Silver Corp | Silvercorp Metals vs. Fortuna Silver Mines | Silvercorp Metals vs. Pan American Silver | Silvercorp Metals vs. First Majestic Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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