Correlation Between Sterling Metals and Search Minerals
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Search Minerals 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 Sterling Metals and Search Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Metals Corp and Search Minerals, you can compare the effects of market volatilities on Sterling Metals and Search Minerals 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 Sterling Metals with a short position of Search Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Search Minerals.
Diversification Opportunities for Sterling Metals and Search Minerals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Search is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Search Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Search Minerals and Sterling Metals 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 Sterling Metals Corp are associated (or correlated) with Search Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Search Minerals has no effect on the direction of Sterling Metals i.e., Sterling Metals and Search Minerals go up and down completely randomly.
Pair Corralation between Sterling Metals and Search Minerals
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the Search Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Sterling Metals Corp is 20.43 times less risky than Search Minerals. The otc stock trades about -0.24 of its potential returns per unit of risk. The Search Minerals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Search Minerals on August 25, 2024 and sell it today you would earn a total of 0.45 from holding Search Minerals or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. Search Minerals
Performance |
| Timeline |
| Sterling Metals Corp |
| Search Minerals |
Sterling Metals and Search Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Search Minerals
The main advantage of trading using opposite Sterling Metals and Search Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, Search Minerals 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 Search Minerals will offset losses from the drop in Search Minerals' long position.| Sterling Metals vs. Norra Metals Corp | Sterling Metals vs. ZincX Resources Corp | Sterling Metals vs. Nuinsco Resources Limited | Sterling Metals vs. South Star Battery |
| Search Minerals vs. Ascendant Resources | Search Minerals vs. Cantex Mine Development | Search Minerals vs. Amarc Resources | Search Minerals vs. Sterling Metals Corp |
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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