Correlation Between Outcrop Gold and Southern Silver

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

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

Diversification Opportunities for Outcrop Gold and Southern Silver

0.66

Correlation Coefficient

Outcrop Gold  Southern Silver

Poor diversification

The 3 months correlation between Outcrop and Southern is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Outcrop Gold Corp and Southern Silver Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Silver Expl and Outcrop Gold 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 Outcrop Gold Corp are associated (or correlated) with Southern Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Silver Expl has no effect on the direction of Outcrop Gold i.e., Outcrop Gold and Southern Silver go up and down completely randomly.

Pair Corralation between Outcrop Gold and Southern Silver

Assuming the 90 days horizon Outcrop Gold is expected to generate 2.28 times less return on investment than Southern Silver. But when comparing it to its historical volatility, Outcrop Gold Corp is 1.11 times less risky than Southern Silver. It trades about 0.05 of its potential returns per unit of risk. Southern Silver Exploration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Southern Silver Exploration on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Southern Silver Exploration or generate 33.33% return on investment over 90 days.

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

Outcrop Gold Corp  vs.  Southern Silver Exploration

Outcrop Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Outcrop Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Outcrop Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Southern Silver Expl

Risk-Adjusted Performance

OK

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

Pair Trading with Outcrop Gold and Southern Silver

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

The idea behind Outcrop Gold Corp and Southern Silver Exploration 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.