Correlation Between Gem Diamonds and Summa Silver
Can any of the company-specific risk be diversified away by investing in both Gem Diamonds and Summa Silver 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 Gem Diamonds and Summa Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Diamonds Limited and Summa Silver Corp, you can compare the effects of market volatilities on Gem Diamonds and Summa Silver 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 Gem Diamonds with a short position of Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Diamonds and Summa Silver.
Diversification Opportunities for Gem Diamonds and Summa Silver
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gem and Summa is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gem Diamonds Limited and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp and Gem Diamonds 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 Gem Diamonds Limited are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Gem Diamonds i.e., Gem Diamonds and Summa Silver go up and down completely randomly.
Pair Corralation between Gem Diamonds and Summa Silver
Assuming the 90 days horizon Gem Diamonds Limited is expected to generate 3.68 times more return on investment than Summa Silver. However, Gem Diamonds is 3.68 times more volatile than Summa Silver Corp. It trades about 0.05 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.02 per unit of risk. If you would invest 5.10 in Gem Diamonds Limited on August 30, 2024 and sell it today you would earn a total of 5.90 from holding Gem Diamonds Limited or generate 115.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gem Diamonds Limited vs. Summa Silver Corp
Performance |
| Timeline |
| Gem Diamonds Limited |
| Summa Silver Corp |
Gem Diamonds and Summa Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gem Diamonds and Summa Silver
The main advantage of trading using opposite Gem Diamonds and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Diamonds position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.| Gem Diamonds vs. Defiance Silver Corp | Gem Diamonds vs. Southern Silver Exploration | Gem Diamonds vs. Silver Grail Resources | Gem Diamonds vs. Alien Metals |
| Summa Silver vs. P2 Gold | Summa Silver vs. Enduro Metals | Summa Silver vs. Kodiak Copper Corp | Summa Silver vs. Mirasol Resources |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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