Correlation Between Silver One and Kootenay Silver

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

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

Diversification Opportunities for Silver One and Kootenay Silver

0.82

Correlation Coefficient

Silver One  Kootenay Silver

Very poor diversification

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

Pair Corralation between Silver One and Kootenay Silver

Assuming the 90 days horizon Silver One is expected to generate 3.82 times less return on investment than Kootenay Silver. But when comparing it to its historical volatility, Silver One Resources is 1.47 times less risky than Kootenay Silver. It trades about 0.02 of its potential returns per unit of risk. Kootenay Silver is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Kootenay Silver on October 5, 2024 and sell it today you would lose (7.00) from holding Kootenay Silver or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.78%
Values	Daily Returns

Silver One Resources  vs.  Kootenay Silver

Silver One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver One 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 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.

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kootenay Silver 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 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.

Pair Trading with Silver One and Kootenay Silver

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

The idea behind Silver One Resources and Kootenay Silver 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.