Correlation Between Southern Silver and Strikepoint Gold

Can any of the company-specific risk be diversified away by investing in both Southern Silver and Strikepoint Gold 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 Strikepoint Gold 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 Strikepoint Gold, you can compare the effects of market volatilities on Southern Silver and Strikepoint Gold 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 Strikepoint Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Silver and Strikepoint Gold.

Diversification Opportunities for Southern Silver and Strikepoint Gold

0.84

Correlation Coefficient

Southern Silver  Strikepoint Gold

Very poor diversification

The 3 months correlation between Southern and Strikepoint is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Southern Silver Exploration and Strikepoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strikepoint Gold 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 Strikepoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strikepoint Gold has no effect on the direction of Southern Silver i.e., Southern Silver and Strikepoint Gold go up and down completely randomly.

Pair Corralation between Southern Silver and Strikepoint Gold

Assuming the 90 days horizon Southern Silver Exploration is expected to generate 0.56 times more return on investment than Strikepoint Gold. However, Southern Silver Exploration is 1.8 times less risky than Strikepoint Gold. It trades about 0.05 of its potential returns per unit of risk. Strikepoint Gold is currently generating about 0.02 per unit of risk. If you would invest  14.00  in Southern Silver Exploration on October 24, 2024 and sell it today you would earn a total of  5.00  from holding Southern Silver Exploration or generate 35.71% 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.  Strikepoint Gold

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 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.

Strikepoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strikepoint Gold 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.

Pair Trading with Southern Silver and Strikepoint Gold

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

The idea behind Southern Silver Exploration and Strikepoint Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.