Correlation Between Defiance Silver and Leocor Gold

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

Diversification Opportunities for Defiance Silver and Leocor Gold

-0.85

Correlation Coefficient

Defiance Silver  Leocor Gold

Pay attention - limited upside

The 3 months correlation between Defiance and Leocor is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Leocor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leocor Gold 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 Leocor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leocor Gold has no effect on the direction of Defiance Silver i.e., Defiance Silver and Leocor Gold go up and down completely randomly.

Pair Corralation between Defiance Silver and Leocor Gold

Assuming the 90 days horizon Defiance Silver Corp is expected to generate 0.95 times more return on investment than Leocor Gold. However, Defiance Silver Corp is 1.05 times less risky than Leocor Gold. It trades about 0.11 of its potential returns per unit of risk. Leocor Gold is currently generating about -0.13 per unit of risk. If you would invest  13.00  in Defiance Silver Corp on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Defiance Silver Corp or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Defiance Silver Corp  vs.  Leocor Gold

Defiance Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 8 (%) 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.

Leocor Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leocor Gold 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Defiance Silver and Leocor Gold

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

The idea behind Defiance Silver Corp and Leocor Gold 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.