Correlation Between Silver Spruce and Argosy Minerals

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

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

Diversification Opportunities for Silver Spruce and Argosy Minerals

0.81

Correlation Coefficient

Silver Spruce  Argosy Minerals

Very poor diversification

The 3 months correlation between Silver and Argosy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources and Argosy Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and Silver Spruce 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 Spruce Resources are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of Silver Spruce i.e., Silver Spruce and Argosy Minerals go up and down completely randomly.

Pair Corralation between Silver Spruce and Argosy Minerals

Assuming the 90 days horizon Silver Spruce Resources is expected to generate 1.86 times more return on investment than Argosy Minerals. However, Silver Spruce is 1.86 times more volatile than Argosy Minerals Limited. It trades about -0.05 of its potential returns per unit of risk. Argosy Minerals Limited is currently generating about -0.1 per unit of risk. If you would invest  0.70  in Silver Spruce Resources on October 25, 2024 and sell it today you would lose (0.34) from holding Silver Spruce Resources or give up 48.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Silver Spruce Resources  vs.  Argosy Minerals Limited

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.

Argosy Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argosy Minerals Limited 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 primary 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 Spruce and Argosy Minerals

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

The idea behind Silver Spruce Resources and Argosy Minerals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.