Correlation Between Silvercorp Metals and TRAINLINE PLC

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

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

Diversification Opportunities for Silvercorp Metals and TRAINLINE PLC

-0.77

Correlation Coefficient

Silvercorp Metals  TRAINLINE PLC

Pay attention - limited upside

The 3 months correlation between Silvercorp and TRAINLINE is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and Silvercorp Metals 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 Silvercorp Metals are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between Silvercorp Metals and TRAINLINE PLC

Assuming the 90 days horizon Silvercorp Metals is expected to under-perform the TRAINLINE PLC. In addition to that, Silvercorp Metals is 1.13 times more volatile than TRAINLINE PLC LS. It trades about -0.19 of its total potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.09 per unit of volatility. If you would invest  398.00  in TRAINLINE PLC LS on October 26, 2024 and sell it today you would earn a total of  60.00  from holding TRAINLINE PLC LS or generate 15.08% return on investment over 90 days.

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

Silvercorp Metals  vs.  TRAINLINE PLC LS

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.

TRAINLINE PLC LS

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Silvercorp Metals and TRAINLINE PLC

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

The idea behind Silvercorp Metals and TRAINLINE PLC LS 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.