Correlation Between Fortuna Silver and Heliostar Metals

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

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

Diversification Opportunities for Fortuna Silver and Heliostar Metals

0.82

Correlation Coefficient

Fortuna Silver  Heliostar Metals

Very poor diversification

The 3 months correlation between Fortuna and Heliostar is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals and Fortuna 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 Fortuna Silver Mines are associated (or correlated) with Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and Heliostar Metals go up and down completely randomly.

Pair Corralation between Fortuna Silver and Heliostar Metals

Considering the 90-day investment horizon Fortuna Silver is expected to generate 1.61 times less return on investment than Heliostar Metals. But when comparing it to its historical volatility, Fortuna Silver Mines is 1.43 times less risky than Heliostar Metals. It trades about 0.19 of its potential returns per unit of risk. Heliostar Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Heliostar Metals on December 30, 2024 and sell it today you would earn a total of  32.00  from holding Heliostar Metals or generate 80.0% return on investment over 90 days.

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

Fortuna Silver Mines  vs.  Heliostar Metals

Fortuna Silver Mines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fortuna Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Heliostar Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heliostar Metals are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heliostar Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortuna Silver and Heliostar Metals

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

The idea behind Fortuna Silver Mines and Heliostar Metals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.