Correlation Between Richelieu Hardware and Summa Silver

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Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Summa 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 Richelieu Hardware and Summa Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Summa Silver Corp, you can compare the effects of market volatilities on Richelieu Hardware and Summa 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 Richelieu Hardware with a short position of Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Summa Silver.

Diversification Opportunities for Richelieu Hardware and Summa Silver

RichelieuSummaDiversified AwayRichelieuSummaDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Richelieu and Summa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Summa Silver go up and down completely randomly.

Pair Corralation between Richelieu Hardware and Summa Silver

Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 0.31 times more return on investment than Summa Silver. However, Richelieu Hardware is 3.24 times less risky than Summa Silver. It trades about 0.0 of its potential returns per unit of risk. Summa Silver Corp is currently generating about 0.0 per unit of risk. If you would invest  3,749  in Richelieu Hardware on November 26, 2024 and sell it today you would lose (121.00) from holding Richelieu Hardware or give up 3.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Richelieu Hardware  vs.  Summa Silver Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15RCH SSVR
       Timeline  
Richelieu Hardware 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Richelieu Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3637383940414243
Summa Silver Corp 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Summa Silver showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.260.280.30.320.340.360.38

Richelieu Hardware and Summa Silver Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.6-1.95-1.3-0.64-0.01040.591.211.832.453.07 0.050.100.15
JavaScript chart by amCharts 3.21.15RCH SSVR
       Returns  

Pair Trading with Richelieu Hardware and Summa Silver

The main advantage of trading using opposite Richelieu Hardware and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Summa 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 Summa Silver will offset losses from the drop in Summa Silver's long position.
The idea behind Richelieu Hardware and Summa 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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