Correlation Between Global Ship and Silvercorp Metals

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

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

Diversification Opportunities for Global Ship and Silvercorp Metals

0.57

Correlation Coefficient

Global Ship  Silvercorp Metals

Very weak diversification

The 3 months correlation between Global and Silvercorp is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Global Ship and Silvercorp Metals

Assuming the 90 days horizon Global Ship is expected to generate 1.72 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, Global Ship Lease is 2.03 times less risky than Silvercorp Metals. It trades about 0.06 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Silvercorp Metals on October 27, 2024 and sell it today you would earn a total of  92.00  from holding Silvercorp Metals or generate 46.0% return on investment over 90 days.

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

Global Ship Lease  vs.  Silvercorp Metals

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Global Ship and Silvercorp Metals

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

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.