Correlation Between Next PLC and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Next PLC 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 Next PLC and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next PLC and Silvercorp Metals, you can compare the effects of market volatilities on Next PLC 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 Next PLC with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next PLC and Silvercorp Metals.
Diversification Opportunities for Next PLC and Silvercorp Metals
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Next and Silvercorp is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Next PLC and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Next PLC 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 Next PLC 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 Next PLC i.e., Next PLC and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Next PLC and Silvercorp Metals
Assuming the 90 days trading horizon Next PLC is expected to generate 0.42 times more return on investment than Silvercorp Metals. However, Next PLC is 2.39 times less risky than Silvercorp Metals. It trades about 0.06 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.0 per unit of risk. If you would invest 914,231 in Next PLC on September 3, 2024 and sell it today you would earn a total of 93,769 from holding Next PLC or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next PLC vs. Silvercorp Metals
Performance |
| Timeline |
| Next PLC |
| Silvercorp Metals |
Next PLC and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next PLC and Silvercorp Metals
The main advantage of trading using opposite Next PLC and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next PLC 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.| Next PLC vs. Silvercorp Metals | Next PLC vs. Cellnex Telecom SA | Next PLC vs. Endeavour Mining Corp | Next PLC vs. Zoom Video Communications |
| Silvercorp Metals vs. British American Tobacco | Silvercorp Metals vs. International Biotechnology Trust | Silvercorp Metals vs. Futura Medical | Silvercorp Metals vs. Gamma Communications PLC |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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