Correlation Between Southern Silver and Scottie Resources

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

Diversification Opportunities for Southern Silver and Scottie Resources

0.63

Correlation Coefficient

Southern Silver  Scottie Resources

Poor diversification

The 3 months correlation between Southern and Scottie is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Southern Silver Exploration and Scottie Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottie Resources Corp 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 Scottie Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottie Resources Corp has no effect on the direction of Southern Silver i.e., Southern Silver and Scottie Resources go up and down completely randomly.

Pair Corralation between Southern Silver and Scottie Resources

Assuming the 90 days horizon Southern Silver Exploration is expected to generate 1.58 times more return on investment than Scottie Resources. However, Southern Silver is 1.58 times more volatile than Scottie Resources Corp. It trades about 0.1 of its potential returns per unit of risk. Scottie Resources Corp is currently generating about 0.06 per unit of risk. If you would invest  12.00  in Southern Silver Exploration on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Southern Silver Exploration or generate 33.33% return on investment over 90 days.

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

Southern Silver Exploration  vs.  Scottie Resources Corp

Southern Silver Expl

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Silver Exploration are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Southern Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Scottie Resources Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scottie Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottie Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Silver and Scottie Resources

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

The idea behind Southern Silver Exploration and Scottie Resources Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.