Correlation Between Eastern and Summa Silver

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

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

Diversification Opportunities for Eastern and Summa Silver

0.85

Correlation Coefficient

Eastern  Summa Silver

Very poor diversification

The 3 months correlation between Eastern and Summa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Summa Silver go up and down completely randomly.

Pair Corralation between Eastern and Summa Silver

Considering the 90-day investment horizon Eastern Co is expected to generate 0.64 times more return on investment than Summa Silver. However, Eastern Co is 1.55 times less risky than Summa Silver. It trades about 0.05 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.02 per unit of risk. If you would invest  1,853  in Eastern Co on September 20, 2024 and sell it today you would earn a total of  1,061  from holding Eastern Co or generate 57.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Eastern Co  vs.  Summa Silver Corp

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Eastern and Summa Silver

The main advantage of trading using opposite Eastern and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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 Eastern Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.