Correlation Between Summa Silver and Gem Diamonds
Can any of the company-specific risk be diversified away by investing in both Summa Silver and Gem Diamonds 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 Gem Diamonds 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 Gem Diamonds Limited, you can compare the effects of market volatilities on Summa Silver and Gem Diamonds 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 Gem Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Gem Diamonds.
Diversification Opportunities for Summa Silver and Gem Diamonds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summa and Gem is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Gem Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Diamonds Limited 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 Gem Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Diamonds Limited has no effect on the direction of Summa Silver i.e., Summa Silver and Gem Diamonds go up and down completely randomly.
Pair Corralation between Summa Silver and Gem Diamonds
Assuming the 90 days horizon Summa Silver is expected to generate 2.45 times less return on investment than Gem Diamonds. In addition to that, Summa Silver is 1.07 times more volatile than Gem Diamonds Limited. It trades about 0.06 of its total potential returns per unit of risk. Gem Diamonds Limited is currently generating about 0.15 per unit of volatility. If you would invest 11.00 in Gem Diamonds Limited on December 1, 2024 and sell it today you would earn a total of 5.00 from holding Gem Diamonds Limited or generate 45.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Summa Silver Corp vs. Gem Diamonds Limited
Performance |
Timeline |
Summa Silver Corp |
Gem Diamonds Limited |
Summa Silver and Gem Diamonds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summa Silver and Gem Diamonds
The main advantage of trading using opposite Summa Silver and Gem Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver position performs unexpectedly, Gem Diamonds 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 Gem Diamonds will offset losses from the drop in Gem Diamonds' long position.Summa Silver vs. P2 Gold | Summa Silver vs. Enduro Metals | Summa Silver vs. Kodiak Copper Corp | Summa Silver vs. Mirasol Resources |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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