Correlation Between Summa Silver and Golden Minerals

Can any of the company-specific risk be diversified away by investing in both Summa Silver and Golden 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 Summa Silver and Golden Minerals 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 Golden Minerals, you can compare the effects of market volatilities on Summa Silver and Golden 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 Summa Silver with a short position of Golden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Golden Minerals.

Diversification Opportunities for Summa Silver and Golden Minerals

-0.18

Correlation Coefficient

Summa Silver  Golden Minerals

Good diversification

The 3 months correlation between Summa and Golden is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals 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 Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of Summa Silver i.e., Summa Silver and Golden Minerals go up and down completely randomly.

Pair Corralation between Summa Silver and Golden Minerals

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Golden Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Summa Silver Corp is 1.3 times less risky than Golden Minerals. The otc stock trades about -0.07 of its potential returns per unit of risk. The Golden Minerals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Golden Minerals on August 31, 2024 and sell it today you would lose (4.00) from holding Golden Minerals or give up 12.9% of portfolio value over 90 days.

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

Summa Silver Corp  vs.  Golden Minerals

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp 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 basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Golden Minerals is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Summa Silver and Golden Minerals

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

The idea behind Summa Silver Corp and Golden Minerals 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 Transaction History module to view history of all your transactions and understand their impact on performance.