Correlation Between Guanajuato Silver and Kuya Silver

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

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

Diversification Opportunities for Guanajuato Silver and Kuya Silver

0.92

Correlation Coefficient

Guanajuato Silver  Kuya Silver

Almost no diversification

The 3 months correlation between Guanajuato and Kuya is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guanajuato Silver and Kuya Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuya Silver and Guanajuato 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 Guanajuato Silver are associated (or correlated) with Kuya Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuya Silver has no effect on the direction of Guanajuato Silver i.e., Guanajuato Silver and Kuya Silver go up and down completely randomly.

Pair Corralation between Guanajuato Silver and Kuya Silver

Assuming the 90 days horizon Guanajuato Silver is expected to generate 1.31 times more return on investment than Kuya Silver. However, Guanajuato Silver is 1.31 times more volatile than Kuya Silver. It trades about -0.09 of its potential returns per unit of risk. Kuya Silver is currently generating about -0.17 per unit of risk. If you would invest  17.00  in Guanajuato Silver on October 9, 2024 and sell it today you would lose (4.00) from holding Guanajuato Silver or give up 23.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.5%
Values	Daily Returns

Guanajuato Silver  vs.  Kuya Silver

Guanajuato Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guanajuato Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kuya Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuya Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Guanajuato Silver and Kuya Silver

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

The idea behind Guanajuato Silver and Kuya Silver 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.