Correlation Between Silvercorp Metals and Adriatic Metals

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

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

Diversification Opportunities for Silvercorp Metals and Adriatic Metals

0.57

Correlation Coefficient

Silvercorp Metals  Adriatic Metals

Very weak diversification

The 3 months correlation between Silvercorp and Adriatic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Adriatic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals 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 Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Adriatic Metals go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Adriatic Metals

Assuming the 90 days trading horizon Silvercorp Metals is expected to under-perform the Adriatic Metals. In addition to that, Silvercorp Metals is 1.28 times more volatile than Adriatic Metals. It trades about -0.04 of its total potential returns per unit of risk. Adriatic Metals is currently generating about 0.17 per unit of volatility. If you would invest  15,220  in Adriatic Metals on September 2, 2024 and sell it today you would earn a total of  5,930  from holding Adriatic Metals or generate 38.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Silvercorp Metals  vs.  Adriatic Metals

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 latest uncertain 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.

Adriatic Metals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silvercorp Metals and Adriatic Metals

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

The idea behind Silvercorp Metals and Adriatic Metals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.