Correlation Between Jardine Matheson and Silver Mines

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

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

Diversification Opportunities for Jardine Matheson and Silver Mines

0.28

Correlation Coefficient

Jardine Matheson  Silver Mines

Modest diversification

The 3 months correlation between Jardine and Silver is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and Silver Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Mines Limited and Jardine Matheson 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 Jardine Matheson Holdings are associated (or correlated) with Silver Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Mines Limited has no effect on the direction of Jardine Matheson i.e., Jardine Matheson and Silver Mines go up and down completely randomly.

Pair Corralation between Jardine Matheson and Silver Mines

Assuming the 90 days horizon Jardine Matheson is expected to generate 9.98 times less return on investment than Silver Mines. But when comparing it to its historical volatility, Jardine Matheson Holdings is 4.3 times less risky than Silver Mines. It trades about 0.04 of its potential returns per unit of risk. Silver Mines Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4.96  in Silver Mines Limited on December 22, 2024 and sell it today you would earn a total of  1.58  from holding Silver Mines Limited or generate 31.85% return on investment over 90 days.

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

Jardine Matheson Holdings  vs.  Silver Mines Limited

Jardine Matheson Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jardine Matheson Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jardine Matheson is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Silver Mines Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Mines Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Silver Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jardine Matheson and Silver Mines

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

The idea behind Jardine Matheson Holdings and Silver Mines 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.