Correlation Between Performance Food and Silvercorp Metals

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

By analyzing existing cross correlation between Performance Food Group and Silvercorp Metals, you can compare the effects of market volatilities on Performance Food and Silvercorp Metals 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 Performance Food with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Silvercorp Metals.

Diversification Opportunities for Performance Food and Silvercorp Metals

-0.81

Correlation Coefficient

Performance Food  Silvercorp Metals

Pay attention - limited upside

The 3 months correlation between Performance and Silvercorp is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Performance Food 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 Performance Food Group are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Performance Food i.e., Performance Food and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Performance Food and Silvercorp Metals

Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the Silvercorp Metals. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 2.9 times less risky than Silvercorp Metals. The stock trades about -0.29 of its potential returns per unit of risk. The Silvercorp Metals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  303.00  in Silvercorp Metals on October 9, 2024 and sell it today you would lose (6.00) from holding Silvercorp Metals or give up 1.98% of portfolio value over 90 days.

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

Performance Food Group  vs.  Silvercorp Metals

Performance Food

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Silvercorp Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvercorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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 Performance Food and Silvercorp Metals

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

The idea behind Performance Food Group and Silvercorp Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.