Correlation Between Defiance Silver and Aquagold International

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Can any of the company-specific risk be diversified away by investing in both Defiance Silver and Aquagold International 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 Defiance Silver and Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Silver Corp and Aquagold International, you can compare the effects of market volatilities on Defiance Silver and Aquagold International 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 Defiance Silver with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Silver and Aquagold International.

Diversification Opportunities for Defiance Silver and Aquagold International

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Defiance and Aquagold is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Defiance 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 Defiance Silver Corp are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Defiance Silver i.e., Defiance Silver and Aquagold International go up and down completely randomly.

Pair Corralation between Defiance Silver and Aquagold International

Assuming the 90 days horizon Defiance Silver Corp is expected to generate 0.55 times more return on investment than Aquagold International. However, Defiance Silver Corp is 1.81 times less risky than Aquagold International. It trades about 0.06 of its potential returns per unit of risk. Aquagold International is currently generating about -0.13 per unit of risk. If you would invest  15.00  in Defiance Silver Corp on November 20, 2024 and sell it today you would earn a total of  2.00  from holding Defiance Silver Corp or generate 13.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.72%
ValuesDaily Returns

Defiance Silver Corp  vs.  Aquagold International

 Performance 
       Timeline  
Defiance Silver Corp 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Defiance Silver reported solid returns over the last few months and may actually be approaching a breakup point.
Aquagold International 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Defiance Silver and Aquagold International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Defiance Silver and Aquagold International

The main advantage of trading using opposite Defiance Silver and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Silver position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.
The idea behind Defiance Silver Corp and Aquagold International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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