Correlation Between Southern Silver and Sable Resources

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

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

Diversification Opportunities for Southern Silver and Sable Resources

0.81

Correlation Coefficient

Southern Silver  Sable Resources

Very poor diversification

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

Pair Corralation between Southern Silver and Sable Resources

Assuming the 90 days horizon Southern Silver Exploration is expected to generate 0.8 times more return on investment than Sable Resources. However, Southern Silver Exploration is 1.25 times less risky than Sable Resources. It trades about 0.05 of its potential returns per unit of risk. Sable Resources is currently generating about 0.02 per unit of risk. If you would invest  14.00  in Southern Silver Exploration on October 8, 2024 and sell it today you would earn a total of  6.00  from holding Southern Silver Exploration or generate 42.86% return on investment over 90 days.

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

Southern Silver Exploration  vs.  Sable Resources

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sable Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Southern Silver and Sable Resources

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

The idea behind Southern Silver Exploration and Sable 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.