Correlation Between Summa Silver and Aurania Resources
Can any of the company-specific risk be diversified away by investing in both Summa Silver and Aurania Resources 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 Summa Silver and Aurania Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summa Silver Corp and Aurania Resources, you can compare the effects of market volatilities on Summa Silver and Aurania Resources 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 Summa Silver with a short position of Aurania Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Aurania Resources.
Diversification Opportunities for Summa Silver and Aurania Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summa and Aurania is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Summa 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 Summa Silver Corp are associated (or correlated) with Aurania Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurania Resources has no effect on the direction of Summa Silver i.e., Summa Silver and Aurania Resources go up and down completely randomly.
Pair Corralation between Summa Silver and Aurania Resources
Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Aurania Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Summa Silver Corp is 1.73 times less risky than Aurania Resources. The otc stock trades about -0.11 of its potential returns per unit of risk. The Aurania Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Aurania Resources on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Aurania Resources or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summa Silver Corp vs. Aurania Resources
Performance |
| Timeline |
| Summa Silver Corp |
| Aurania Resources |
Summa Silver and Aurania Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summa Silver and Aurania Resources
The main advantage of trading using opposite Summa Silver and Aurania Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver position performs unexpectedly, Aurania Resources 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 Aurania Resources will offset losses from the drop in Aurania Resources' long position.| Summa Silver vs. P2 Gold | Summa Silver vs. Enduro Metals | Summa Silver vs. Kodiak Copper Corp | Summa Silver vs. Mirasol Resources |
| Aurania Resources vs. Papaya Growth Opportunity | Aurania Resources vs. Haverty Furniture Companies | Aurania Resources vs. Hudson Pacific Properties | Aurania Resources vs. Franklin Street Properties |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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