Correlation Between Eastinco Mining and Silvercorp Metals

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

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

Diversification Opportunities for Eastinco Mining and Silvercorp Metals

0.22

Correlation Coefficient

Eastinco Mining  Silvercorp Metals

Modest diversification

The 3 months correlation between Eastinco and Silvercorp is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eastinco Mining Exploration and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Eastinco Mining 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 Eastinco Mining Exploration 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 Eastinco Mining i.e., Eastinco Mining and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Eastinco Mining and Silvercorp Metals

Assuming the 90 days trading horizon Eastinco Mining Exploration is expected to generate 0.44 times more return on investment than Silvercorp Metals. However, Eastinco Mining Exploration is 2.29 times less risky than Silvercorp Metals. It trades about -0.12 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.12 per unit of risk. If you would invest  5,350  in Eastinco Mining Exploration on October 3, 2024 and sell it today you would lose (650.00) from holding Eastinco Mining Exploration or give up 12.15% of portfolio value over 90 days.

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

Eastinco Mining Exploration  vs.  Silvercorp Metals

Eastinco Mining Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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. 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eastinco Mining and Silvercorp Metals

The main advantage of trading using opposite Eastinco Mining and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastinco Mining 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 Eastinco Mining Exploration 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.