Correlation Between Silvercorp Metals and Lundin Mining

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

By analyzing existing cross correlation between Silvercorp Metals and Lundin Mining Corp, you can compare the effects of market volatilities on Silvercorp Metals and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silvercorp Metals and Lundin Mining.

Diversification Opportunities for Silvercorp Metals and Lundin Mining

0.51

Correlation Coefficient

Silvercorp Metals  Lundin Mining

Very weak diversification

The 3 months correlation between Silvercorp and Lundin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Lundin Mining go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Lundin Mining

Assuming the 90 days trading horizon Silvercorp Metals is expected to generate 7.79 times less return on investment than Lundin Mining. In addition to that, Silvercorp Metals is 1.44 times more volatile than Lundin Mining Corp. It trades about 0.01 of its total potential returns per unit of risk. Lundin Mining Corp is currently generating about 0.12 per unit of volatility. If you would invest  9,147  in Lundin Mining Corp on September 5, 2024 and sell it today you would earn a total of  1,873  from holding Lundin Mining Corp or generate 20.48% return on investment over 90 days.

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

Silvercorp Metals  vs.  Lundin Mining Corp

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 comparatively stable basic indicators, Silvercorp Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lundin Mining Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lundin Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silvercorp Metals and Lundin Mining

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

The idea behind Silvercorp Metals and Lundin Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.