Correlation Between SilverCrest Metals and Zimplats Holdings

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

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

Diversification Opportunities for SilverCrest Metals and Zimplats Holdings

0.36

Correlation Coefficient

SilverCrest Metals  Zimplats Holdings

Weak diversification

The 3 months correlation between SilverCrest and Zimplats is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Zimplats Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimplats Holdings and SilverCrest 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 SilverCrest Metals are associated (or correlated) with Zimplats Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimplats Holdings has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Zimplats Holdings go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Zimplats Holdings

If you would invest  912.00  in Zimplats Holdings Limited on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Zimplats Holdings Limited or generate 0.0% return on investment over 90 days.

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

SilverCrest Metals  vs.  Zimplats Holdings Limited

SilverCrest Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, SilverCrest Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zimplats Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SilverCrest Metals and Zimplats Holdings

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

The idea behind SilverCrest Metals and Zimplats Holdings Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.