Correlation Between Silvercorp Metals and Silver One

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

By analyzing existing cross correlation between Silvercorp Metals and Silver One Resources, you can compare the effects of market volatilities on Silvercorp Metals and Silver One 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 Silvercorp Metals with a short position of Silver One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silvercorp Metals and Silver One.

Diversification Opportunities for Silvercorp Metals and Silver One

0.85

Correlation Coefficient

Silvercorp Metals  Silver One

Very poor diversification

The 3 months correlation between Silvercorp and Silver is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Silver One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver One Resources and Silvercorp Metals 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 Silvercorp Metals are associated (or correlated) with Silver One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver One Resources has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Silver One go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Silver One

Considering the 90-day investment horizon Silvercorp Metals is expected to generate 0.71 times more return on investment than Silver One. However, Silvercorp Metals is 1.4 times less risky than Silver One. It trades about -0.01 of its potential returns per unit of risk. Silver One Resources is currently generating about -0.05 per unit of risk. If you would invest  350.00  in Silvercorp Metals on September 1, 2024 and sell it today you would lose (21.00) from holding Silvercorp Metals or give up 6.0% of portfolio value over 90 days.

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

Silvercorp Metals  vs.  Silver One Resources

Silvercorp Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Silver One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver One Resources 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.

Pair Trading with Silvercorp Metals and Silver One

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

The idea behind Silvercorp Metals and Silver One Resources 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.