Correlation Between Summa Silver and Postmedia Network

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

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

Diversification Opportunities for Summa Silver and Postmedia Network

-0.3

Correlation Coefficient

Summa Silver  Postmedia Network

Very good diversification

The 3 months correlation between Summa and Postmedia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and Summa 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 Summa Silver Corp are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Summa Silver i.e., Summa Silver and Postmedia Network go up and down completely randomly.

Pair Corralation between Summa Silver and Postmedia Network

Assuming the 90 days trading horizon Summa Silver Corp is expected to generate 0.99 times more return on investment than Postmedia Network. However, Summa Silver Corp is 1.01 times less risky than Postmedia Network. It trades about 0.07 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.03 per unit of risk. If you would invest  28.00  in Summa Silver Corp on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Summa Silver Corp or generate 14.29% return on investment over 90 days.

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

Summa Silver Corp  vs.  Postmedia Network Canada

Summa Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Summa Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Postmedia Network Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Summa Silver and Postmedia Network

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

The idea behind Summa Silver Corp and Postmedia Network Canada 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.