Correlation Between Silver Hammer and Interfor

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

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

Diversification Opportunities for Silver Hammer and Interfor

-0.21

Correlation Coefficient

Silver Hammer  Interfor

Very good diversification

The 3 months correlation between Silver and Interfor is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Silver Hammer Mining and Interfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interfor and Silver Hammer 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 Silver Hammer Mining are associated (or correlated) with Interfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interfor has no effect on the direction of Silver Hammer i.e., Silver Hammer and Interfor go up and down completely randomly.

Pair Corralation between Silver Hammer and Interfor

Assuming the 90 days horizon Silver Hammer Mining is expected to generate 7.64 times more return on investment than Interfor. However, Silver Hammer is 7.64 times more volatile than Interfor. It trades about 0.07 of its potential returns per unit of risk. Interfor is currently generating about 0.12 per unit of risk. If you would invest  3.80  in Silver Hammer Mining on August 30, 2024 and sell it today you would lose (1.00) from holding Silver Hammer Mining or give up 26.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Silver Hammer Mining  vs.  Interfor

Silver Hammer Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Hammer Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Hammer reported solid returns over the last few months and may actually be approaching a breakup point.

Interfor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interfor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Interfor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Hammer and Interfor

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

The idea behind Silver Hammer Mining and Interfor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..