Correlation Between Fortuna Silver and Eastinco Mining

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

By analyzing existing cross correlation between Fortuna Silver Mines and Eastinco Mining Exploration, you can compare the effects of market volatilities on Fortuna Silver and Eastinco Mining 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 Fortuna Silver with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortuna Silver and Eastinco Mining.

Diversification Opportunities for Fortuna Silver and Eastinco Mining

-0.32

Correlation Coefficient

Fortuna Silver  Eastinco Mining

Very good diversification

The 3 months correlation between Fortuna and Eastinco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Fortuna 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 Fortuna Silver Mines are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and Eastinco Mining go up and down completely randomly.

Pair Corralation between Fortuna Silver and Eastinco Mining

Assuming the 90 days trading horizon Fortuna Silver Mines is expected to under-perform the Eastinco Mining. In addition to that, Fortuna Silver is 1.12 times more volatile than Eastinco Mining Exploration. It trades about -0.02 of its total potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.32 per unit of volatility. If you would invest  4,550  in Eastinco Mining Exploration on October 25, 2024 and sell it today you would earn a total of  850.00  from holding Eastinco Mining Exploration or generate 18.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Fortuna Silver Mines  vs.  Eastinco Mining Exploration

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortuna Silver Mines 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eastinco Mining Expl

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastinco Mining Exploration are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eastinco Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fortuna Silver and Eastinco Mining

The main advantage of trading using opposite Fortuna Silver and Eastinco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortuna Silver position performs unexpectedly, Eastinco Mining 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 Eastinco Mining will offset losses from the drop in Eastinco Mining's long position.

The idea behind Fortuna Silver Mines and Eastinco Mining Exploration 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.