Correlation Between Gatos Silver and Catalyst Metals

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

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

Diversification Opportunities for Gatos Silver and Catalyst Metals

0.0

Correlation Coefficient

Gatos Silver  Catalyst Metals

Pay attention - limited upside

The 3 months correlation between Gatos and Catalyst is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Gatos 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 Gatos Silver are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Gatos Silver i.e., Gatos Silver and Catalyst Metals go up and down completely randomly.

Pair Corralation between Gatos Silver and Catalyst Metals

If you would invest  176.00  in Catalyst Metals Limited on December 20, 2024 and sell it today you would earn a total of  109.00  from holding Catalyst Metals Limited or generate 61.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gatos Silver  vs.  Catalyst Metals Limited

Gatos Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gatos Silver is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Catalyst Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Metals Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Catalyst Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatos Silver and Catalyst Metals

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

The idea behind Gatos Silver and Catalyst Metals Limited 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.