Correlation Between Guanajuato Silver and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Guanajuato Silver 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 Guanajuato Silver and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guanajuato Silver and Silvercorp Metals, you can compare the effects of market volatilities on Guanajuato Silver 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 Guanajuato Silver with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guanajuato Silver and Silvercorp Metals.
Diversification Opportunities for Guanajuato Silver and Silvercorp Metals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guanajuato and Silvercorp is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guanajuato Silver and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Guanajuato Silver 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 Guanajuato Silver 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 Guanajuato Silver i.e., Guanajuato Silver and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Guanajuato Silver and Silvercorp Metals
Assuming the 90 days horizon Guanajuato Silver is expected to under-perform the Silvercorp Metals. In addition to that, Guanajuato Silver is 1.51 times more volatile than Silvercorp Metals. It trades about -0.28 of its total potential returns per unit of risk. Silvercorp Metals is currently generating about -0.42 per unit of volatility. If you would invest 488.00 in Silvercorp Metals on August 28, 2024 and sell it today you would lose (154.00) from holding Silvercorp Metals or give up 31.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guanajuato Silver vs. Silvercorp Metals
Performance |
| Timeline |
| Guanajuato Silver |
| Silvercorp Metals |
Guanajuato Silver and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guanajuato Silver and Silvercorp Metals
The main advantage of trading using opposite Guanajuato Silver and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guanajuato Silver 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.| Guanajuato Silver vs. Bald Eagle Gold | Guanajuato Silver vs. Silver One Resources | Guanajuato Silver vs. Dolly Varden Silver | Guanajuato Silver vs. Kootenay 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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