Correlation Between Savannah Resources and European Metals

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

By analyzing existing cross correlation between Savannah Resources Plc and European Metals Holdings, you can compare the effects of market volatilities on Savannah Resources and European 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 Savannah Resources with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Savannah Resources and European Metals.

Diversification Opportunities for Savannah Resources and European Metals

0.0

Correlation Coefficient

Savannah Resources  European Metals

Pay attention - limited upside

The 3 months correlation between Savannah and European is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Savannah Resources Plc and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Savannah Resources 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 Savannah Resources Plc are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Savannah Resources i.e., Savannah Resources and European Metals go up and down completely randomly.

Pair Corralation between Savannah Resources and European Metals

If you would invest  4.06  in Savannah Resources Plc on November 27, 2024 and sell it today you would earn a total of  0.41  from holding Savannah Resources Plc or generate 10.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Savannah Resources Plc  vs.  European Metals Holdings

Savannah Resources Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Savannah Resources Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Savannah Resources reported solid returns over the last few months and may actually be approaching a breakup point.

European Metals Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days European Metals Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, European Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Savannah Resources and European Metals

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

The idea behind Savannah Resources Plc and European Metals Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.