Correlation Between Andean Silver and Suncorp

Can any of the company-specific risk be diversified away by investing in both Andean Silver and Suncorp 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 Suncorp 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 Suncorp Group, you can compare the effects of market volatilities on Andean Silver and Suncorp 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 Suncorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andean Silver and Suncorp.

Diversification Opportunities for Andean Silver and Suncorp

-0.11

Correlation Coefficient

Andean Silver  Suncorp

Good diversification

The 3 months correlation between Andean and Suncorp is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Andean Silver Limited and Suncorp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group 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 Suncorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group has no effect on the direction of Andean Silver i.e., Andean Silver and Suncorp go up and down completely randomly.

Pair Corralation between Andean Silver and Suncorp

Assuming the 90 days trading horizon Andean Silver Limited is expected to generate 1.68 times more return on investment than Suncorp. However, Andean Silver is 1.68 times more volatile than Suncorp Group. It trades about 0.17 of its potential returns per unit of risk. Suncorp Group is currently generating about -0.09 per unit of risk. If you would invest  83.00  in Andean Silver Limited on December 22, 2024 and sell it today you would earn a total of  40.00  from holding Andean Silver Limited or generate 48.19% return on investment over 90 days.

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

Andean Silver Limited  vs.  Suncorp Group

Andean Silver Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Silver Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Andean Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

Suncorp Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suncorp 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Andean Silver and Suncorp

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

The idea behind Andean Silver Limited and Suncorp 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.