Correlation Between Andean Silver and ACDC Metals

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

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

Diversification Opportunities for Andean Silver and ACDC Metals

0.7

Correlation Coefficient

Andean Silver  ACDC Metals

Poor diversification

The 3 months correlation between Andean and ACDC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Andean Silver Limited and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Andean 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 Andean Silver Limited are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Andean Silver i.e., Andean Silver and ACDC Metals go up and down completely randomly.

Pair Corralation between Andean Silver and ACDC Metals

Assuming the 90 days trading horizon Andean Silver Limited is expected to under-perform the ACDC Metals. But the stock apears to be less risky and, when comparing its historical volatility, Andean Silver Limited is 1.12 times less risky than ACDC Metals. The stock trades about -0.04 of its potential returns per unit of risk. The ACDC Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5.20  in ACDC Metals on September 16, 2024 and sell it today you would earn a total of  0.70  from holding ACDC Metals or generate 13.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.97%
Values	Daily Returns

Andean Silver Limited  vs.  ACDC Metals

Andean Silver Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andean Silver Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ACDC Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ACDC Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, ACDC Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andean Silver and ACDC Metals

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

The idea behind Andean Silver Limited and ACDC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.