Correlation Between Kootenay Silver and Silver One

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

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

Diversification Opportunities for Kootenay Silver and Silver One

0.82

Correlation Coefficient

Kootenay Silver  Silver One

Very poor diversification

The 3 months correlation between Kootenay and Silver is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kootenay Silver and Silver One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver One Resources and Kootenay 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 Kootenay Silver are associated (or correlated) with Silver One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver One Resources has no effect on the direction of Kootenay Silver i.e., Kootenay Silver and Silver One go up and down completely randomly.

Pair Corralation between Kootenay Silver and Silver One

Assuming the 90 days horizon Kootenay Silver is expected to generate 1.47 times more return on investment than Silver One. However, Kootenay Silver is 1.47 times more volatile than Silver One Resources. It trades about 0.04 of its potential returns per unit of risk. Silver One Resources is currently generating about 0.02 per unit of risk. If you would invest  75.00  in Kootenay Silver on October 5, 2024 and sell it today you would lose (7.00) from holding Kootenay Silver or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.78%
Values	Daily Returns

Kootenay Silver  vs.  Silver One Resources

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kootenay 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.

Silver One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver One Resources 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 Kootenay Silver and Silver One

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

The idea behind Kootenay Silver and Silver One Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.