Correlation Between Santacruz Silver and Silver Mines

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

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

Diversification Opportunities for Santacruz Silver and Silver Mines

0.64

Correlation Coefficient

Santacruz Silver  Silver Mines

Poor diversification

The 3 months correlation between Santacruz and Silver is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Santacruz Silver Mining and Silver Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Mines Limited and Santacruz 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 Santacruz Silver Mining are associated (or correlated) with Silver Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Mines Limited has no effect on the direction of Santacruz Silver i.e., Santacruz Silver and Silver Mines go up and down completely randomly.

Pair Corralation between Santacruz Silver and Silver Mines

Assuming the 90 days horizon Santacruz Silver Mining is expected to generate 0.77 times more return on investment than Silver Mines. However, Santacruz Silver Mining is 1.3 times less risky than Silver Mines. It trades about 0.2 of its potential returns per unit of risk. Silver Mines Limited is currently generating about 0.05 per unit of risk. If you would invest  18.00  in Santacruz Silver Mining on December 23, 2024 and sell it today you would earn a total of  16.00  from holding Santacruz Silver Mining or generate 88.89% return on investment over 90 days.

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

Santacruz Silver Mining  vs.  Silver Mines Limited

Santacruz Silver Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Santacruz Silver Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Santacruz Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Silver Mines Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Mines Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santacruz Silver and Silver Mines

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

The idea behind Santacruz Silver Mining and Silver Mines Limited 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.