Correlation Between Critical Metals and Summa Silver

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

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

Diversification Opportunities for Critical Metals and Summa Silver

-0.11

Correlation Coefficient

Critical Metals  Summa Silver

Good diversification

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

Pair Corralation between Critical Metals and Summa Silver

Given the investment horizon of 90 days Critical Metals is expected to generate 1.05 times less return on investment than Summa Silver. But when comparing it to its historical volatility, Critical Metals Corp is 1.01 times less risky than Summa Silver. It trades about 0.21 of its potential returns per unit of risk. Summa Silver Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Summa Silver Corp on October 24, 2024 and sell it today you would earn a total of  4.00  from holding Summa Silver Corp or generate 21.05% return on investment over 90 days.

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

Critical Metals Corp  vs.  Summa Silver Corp

Critical Metals Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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 Critical Metals and Summa Silver

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

The idea behind Critical Metals Corp and Summa Silver 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.