Correlation Between Minco Silver and IMPACT Silver

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

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

Diversification Opportunities for Minco Silver and IMPACT Silver

0.44

Correlation Coefficient

Minco Silver  IMPACT Silver

Very weak diversification

The 3 months correlation between Minco and IMPACT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Minco Silver and IMPACT Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPACT Silver Corp and Minco 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 Minco Silver are associated (or correlated) with IMPACT Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPACT Silver Corp has no effect on the direction of Minco Silver i.e., Minco Silver and IMPACT Silver go up and down completely randomly.

Pair Corralation between Minco Silver and IMPACT Silver

Assuming the 90 days trading horizon Minco Silver is expected to generate 1.4 times less return on investment than IMPACT Silver. But when comparing it to its historical volatility, Minco Silver is 1.5 times less risky than IMPACT Silver. It trades about 0.08 of its potential returns per unit of risk. IMPACT Silver Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20.00  in IMPACT Silver Corp on September 9, 2024 and sell it today you would earn a total of  4.00  from holding IMPACT Silver Corp or generate 20.0% return on investment over 90 days.

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

Minco Silver  vs.  IMPACT Silver Corp

Minco Silver

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minco Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Minco Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

IMPACT Silver Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IMPACT Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IMPACT Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minco Silver and IMPACT Silver

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

The idea behind Minco Silver and IMPACT Silver Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.