Correlation Between Silver Hammer and Monarch Cement

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Can any of the company-specific risk be diversified away by investing in both Silver Hammer and Monarch Cement 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 Silver Hammer and Monarch Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Hammer Mining and The Monarch Cement, you can compare the effects of market volatilities on Silver Hammer and Monarch Cement 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 Silver Hammer with a short position of Monarch Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Hammer and Monarch Cement.

Diversification Opportunities for Silver Hammer and Monarch Cement

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Silver and Monarch is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Silver Hammer Mining and The Monarch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Cement and Silver Hammer 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 Silver Hammer Mining are associated (or correlated) with Monarch Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Cement has no effect on the direction of Silver Hammer i.e., Silver Hammer and Monarch Cement go up and down completely randomly.

Pair Corralation between Silver Hammer and Monarch Cement

Assuming the 90 days horizon Silver Hammer is expected to generate 1.5 times less return on investment than Monarch Cement. In addition to that, Silver Hammer is 5.92 times more volatile than The Monarch Cement. It trades about 0.01 of its total potential returns per unit of risk. The Monarch Cement is currently generating about 0.12 per unit of volatility. If you would invest  9,662  in The Monarch Cement on August 30, 2024 and sell it today you would earn a total of  12,187  from holding The Monarch Cement or generate 126.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy84.27%
ValuesDaily Returns

Silver Hammer Mining  vs.  The Monarch Cement

 Performance 
       Timeline  
Silver Hammer Mining 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Silver Hammer Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Hammer reported solid returns over the last few months and may actually be approaching a breakup point.
Monarch Cement 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Monarch Cement are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Monarch Cement displayed solid returns over the last few months and may actually be approaching a breakup point.

Silver Hammer and Monarch Cement Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silver Hammer and Monarch Cement

The main advantage of trading using opposite Silver Hammer and Monarch Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Hammer position performs unexpectedly, Monarch Cement 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 Monarch Cement will offset losses from the drop in Monarch Cement's long position.
The idea behind Silver Hammer Mining and The Monarch Cement 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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