Correlation Between MAG SILVER and Oversea Chinese

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

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

Diversification Opportunities for MAG SILVER and Oversea Chinese

0.51

Correlation Coefficient

MAG SILVER  Oversea Chinese

Very weak diversification

The 3 months correlation between MAG and Oversea is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MAG SILVER and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea Chinese Banking and MAG 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 MAG SILVER are associated (or correlated) with Oversea Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea Chinese Banking has no effect on the direction of MAG SILVER i.e., MAG SILVER and Oversea Chinese go up and down completely randomly.

Pair Corralation between MAG SILVER and Oversea Chinese

Assuming the 90 days trading horizon MAG SILVER is expected to generate 2.21 times more return on investment than Oversea Chinese. However, MAG SILVER is 2.21 times more volatile than Oversea Chinese Banking. It trades about 0.07 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.02 per unit of risk. If you would invest  1,332  in MAG SILVER on December 25, 2024 and sell it today you would earn a total of  123.00  from holding MAG SILVER or generate 9.23% return on investment over 90 days.

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

MAG SILVER  vs.  Oversea Chinese Banking

MAG SILVER

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAG SILVER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAG SILVER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oversea Chinese Banking

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oversea Chinese Banking are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Oversea Chinese is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MAG SILVER and Oversea Chinese

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

The idea behind MAG SILVER and Oversea Chinese Banking 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.