Correlation Between Silvercorp Metals and Inspiration Healthcare

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

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

Diversification Opportunities for Silvercorp Metals and Inspiration Healthcare

-0.26

Correlation Coefficient

Silvercorp Metals  Inspiration Healthcare

Very good diversification

The 3 months correlation between Silvercorp and Inspiration is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare and Silvercorp 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 Silvercorp Metals are associated (or correlated) with Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Inspiration Healthcare go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Inspiration Healthcare

Assuming the 90 days trading horizon Silvercorp Metals is expected to generate 1.8 times more return on investment than Inspiration Healthcare. However, Silvercorp Metals is 1.8 times more volatile than Inspiration Healthcare Group. It trades about 0.01 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.28 per unit of risk. If you would invest  473.00  in Silvercorp Metals on September 5, 2024 and sell it today you would lose (11.00) from holding Silvercorp Metals or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Silvercorp Metals  vs.  Inspiration Healthcare Group

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 comparatively stable basic indicators, Silvercorp Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Inspiration Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspiration Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Silvercorp Metals and Inspiration Healthcare

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

The idea behind Silvercorp Metals and Inspiration Healthcare Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.