Correlation Between Indutrade and Silvercorp Metals

Can any of the company-specific risk be diversified away by investing in both Indutrade 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 Indutrade and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indutrade AB and Silvercorp Metals, you can compare the effects of market volatilities on Indutrade 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 Indutrade with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Silvercorp Metals.

Diversification Opportunities for Indutrade and Silvercorp Metals

0.18

Correlation Coefficient

Indutrade  Silvercorp Metals

Average diversification

The 3 months correlation between Indutrade and Silvercorp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Indutrade 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 Indutrade AB 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 Indutrade i.e., Indutrade and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Indutrade and Silvercorp Metals

Assuming the 90 days trading horizon Indutrade AB is expected to under-perform the Silvercorp Metals. But the stock apears to be less risky and, when comparing its historical volatility, Indutrade AB is 3.0 times less risky than Silvercorp Metals. The stock trades about -0.16 of its potential returns per unit of risk. The Silvercorp Metals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Silvercorp Metals on August 31, 2024 and sell it today you would lose (81.00) from holding Silvercorp Metals or give up 15.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Indutrade AB  vs.  Silvercorp Metals

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Silvercorp Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvercorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Indutrade and Silvercorp Metals

The main advantage of trading using opposite Indutrade and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade 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.

The idea behind Indutrade AB and Silvercorp Metals 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.