Correlation Between Endeavour Silver and China Gold

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

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

Diversification Opportunities for Endeavour Silver and China Gold

-0.06

Correlation Coefficient

Endeavour Silver  China Gold

Good diversification

The 3 months correlation between Endeavour and China is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and China Gold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gold International and Endeavour 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 Endeavour Silver Corp are associated (or correlated) with China Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gold International has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and China Gold go up and down completely randomly.

Pair Corralation between Endeavour Silver and China Gold

Considering the 90-day investment horizon Endeavour Silver Corp is expected to under-perform the China Gold. In addition to that, Endeavour Silver is 2.07 times more volatile than China Gold International. It trades about -0.07 of its total potential returns per unit of risk. China Gold International is currently generating about -0.08 per unit of volatility. If you would invest  580.00  in China Gold International on December 2, 2024 and sell it today you would lose (20.00) from holding China Gold International or give up 3.45% of portfolio value over 90 days.

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

Endeavour Silver Corp  vs.  China Gold International

Endeavour Silver Corp

Risk-Adjusted Performance

Very Weak

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

China Gold International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, China Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Silver and China Gold

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

The idea behind Endeavour Silver Corp and China Gold 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.