Correlation Between Gatos Silver and Southland Holdings

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

By analyzing existing cross correlation between Gatos Silver and Southland Holdings, you can compare the effects of market volatilities on Gatos Silver and Southland Holdings 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 Southland Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Southland Holdings.

Diversification Opportunities for Gatos Silver and Southland Holdings

-0.18

Correlation Coefficient

Gatos Silver  Southland Holdings

Good diversification

The 3 months correlation between Gatos and Southland is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Southland Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southland Holdings 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 Southland Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southland Holdings has no effect on the direction of Gatos Silver i.e., Gatos Silver and Southland Holdings go up and down completely randomly.

Pair Corralation between Gatos Silver and Southland Holdings

Given the investment horizon of 90 days Gatos Silver is expected to generate 0.89 times more return on investment than Southland Holdings. However, Gatos Silver is 1.13 times less risky than Southland Holdings. It trades about 0.08 of its potential returns per unit of risk. Southland Holdings is currently generating about -0.03 per unit of risk. If you would invest  497.00  in Gatos Silver on October 10, 2024 and sell it today you would earn a total of  1,011  from holding Gatos Silver or generate 203.42% return on investment over 90 days.

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

Gatos Silver  vs.  Southland Holdings

Gatos Silver

Risk-Adjusted Performance

0 of 100

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.

Southland Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southland Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Southland Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gatos Silver and Southland Holdings

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

The idea behind Gatos Silver and Southland Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.