Correlation Between GM and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Silvercorp Metals, you can compare the effects of market volatilities on GM 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 GM with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Silvercorp Metals.
Diversification Opportunities for GM and Silvercorp Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Silvercorp is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and GM 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 General Motors 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 GM i.e., GM and Silvercorp Metals go up and down completely randomly.
Pair Corralation between GM and Silvercorp Metals
Allowing for the 90-day total investment horizon GM is expected to generate 1.21 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, General Motors is 1.7 times less risky than Silvercorp Metals. It trades about 0.09 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Silvercorp Metals on December 7, 2024 and sell it today you would earn a total of 155.00 from holding Silvercorp Metals or generate 79.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.5% |
| Values | Daily Returns |
General Motors vs. Silvercorp Metals
Performance |
| Timeline |
| General Motors |
| Silvercorp Metals |
GM and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Silvercorp Metals
The main advantage of trading using opposite GM and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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. Kingdee International Software | Silvercorp Metals vs. Verizon Communications | Silvercorp Metals vs. Vishay Intertechnology | Silvercorp Metals vs. Mobilezone Holding AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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