Correlation Between Silver X and Sterling Metals

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

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

Diversification Opportunities for Silver X and Sterling Metals

0.5

Correlation Coefficient

Silver X  Sterling Metals

Very weak diversification

The 3 months correlation between Silver and Sterling is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Silver X Mining and Sterling Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Metals Corp and Silver X 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 Silver X Mining are associated (or correlated) with Sterling Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Metals Corp has no effect on the direction of Silver X i.e., Silver X and Sterling Metals go up and down completely randomly.

Pair Corralation between Silver X and Sterling Metals

Assuming the 90 days horizon Silver X Mining is expected to under-perform the Sterling Metals. But the otc stock apears to be less risky and, when comparing its historical volatility, Silver X Mining is 21.97 times less risky than Sterling Metals. The otc stock trades about -0.02 of its potential returns per unit of risk. The Sterling Metals Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Sterling Metals Corp on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Sterling Metals Corp or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Silver X Mining  vs.  Sterling Metals Corp

Silver X Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver X Mining 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.

Sterling Metals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Metals Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Sterling Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver X and Sterling Metals

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

The idea behind Silver X Mining and Sterling Metals Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.