Correlation Between Santacruz Silv and Southern Silver

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

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

Diversification Opportunities for Santacruz Silv and Southern Silver

0.69

Correlation Coefficient

Santacruz Silv  Southern Silver

Poor diversification

The 3 months correlation between Santacruz and Southern is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Santacruz Silv 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 Santacruz Silv 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 Santacruz Silv 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 Santacruz Silv i.e., Santacruz Silv and Southern Silver go up and down completely randomly.

Pair Corralation between Santacruz Silv and Southern Silver

Assuming the 90 days horizon Santacruz Silv is expected to generate 0.79 times more return on investment than Southern Silver. However, Santacruz Silv is 1.27 times less risky than Southern Silver. It trades about 0.06 of its potential returns per unit of risk. Southern Silver Exploration is currently generating about -0.02 per unit of risk. If you would invest  27.00  in Santacruz Silv on September 2, 2024 and sell it today you would earn a total of  3.00  from holding Santacruz Silv or generate 11.11% return on investment over 90 days.

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

Santacruz Silv  vs.  Southern Silver Exploration

Santacruz Silv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Santacruz Silv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Santacruz Silv showed solid returns over the last few months and may actually be approaching a breakup point.

Southern Silver Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Silver Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Santacruz Silv and Southern Silver

The main advantage of trading using opposite Santacruz Silv and Southern Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santacruz Silv 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 Santacruz Silv 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.