Correlation Between SolGold Plc and Silver Spruce

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

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

Diversification Opportunities for SolGold Plc and Silver Spruce

0.82

Correlation Coefficient

SolGold Plc  Silver Spruce

Very poor diversification

The 3 months correlation between SolGold and Silver is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SolGold Plc and Silver Spruce Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spruce Resources and SolGold Plc 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 SolGold Plc are associated (or correlated) with Silver Spruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spruce Resources has no effect on the direction of SolGold Plc i.e., SolGold Plc and Silver Spruce go up and down completely randomly.

Pair Corralation between SolGold Plc and Silver Spruce

Assuming the 90 days horizon SolGold Plc is expected to generate 1.44 times less return on investment than Silver Spruce. But when comparing it to its historical volatility, SolGold Plc is 1.03 times less risky than Silver Spruce. It trades about 0.09 of its potential returns per unit of risk. Silver Spruce Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.37  in Silver Spruce Resources on October 26, 2024 and sell it today you would earn a total of  0.05  from holding Silver Spruce Resources or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

SolGold Plc  vs.  Silver Spruce Resources

SolGold Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Silver Spruce Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Spruce Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers 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.

Pair Trading with SolGold Plc and Silver Spruce

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

The idea behind SolGold Plc and Silver Spruce Resources 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.