Correlation Between Fortuna Silver and SSR Mining

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

Diversification Opportunities for Fortuna Silver and SSR Mining

0.9

Correlation Coefficient

Fortuna Silver  SSR Mining

Almost no diversification

The 3 months correlation between Fortuna and SSR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and SSR Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSR Mining 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 SSR Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSR Mining has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and SSR Mining go up and down completely randomly.

Pair Corralation between Fortuna Silver and SSR Mining

Assuming the 90 days trading horizon Fortuna Silver Mines is expected to generate 0.83 times more return on investment than SSR Mining. However, Fortuna Silver Mines is 1.21 times less risky than SSR Mining. It trades about 0.04 of its potential returns per unit of risk. SSR Mining is currently generating about -0.03 per unit of risk. If you would invest  484.00  in Fortuna Silver Mines on August 31, 2024 and sell it today you would earn a total of  191.00  from holding Fortuna Silver Mines or generate 39.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

Fortuna Silver Mines  vs.  SSR Mining

Fortuna Silver Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Fortuna Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

SSR Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSR Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, SSR Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortuna Silver and SSR Mining

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

The idea behind Fortuna Silver Mines and SSR Mining 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..