Correlation Between AbraSilver Resource and Defiance Silver

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

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

Diversification Opportunities for AbraSilver Resource and Defiance Silver

0.62

Correlation Coefficient

AbraSilver Resource  Defiance Silver

Poor diversification

The 3 months correlation between AbraSilver and Defiance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AbraSilver Resource Corp and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and AbraSilver Resource 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 AbraSilver Resource Corp are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of AbraSilver Resource i.e., AbraSilver Resource and Defiance Silver go up and down completely randomly.

Pair Corralation between AbraSilver Resource and Defiance Silver

Assuming the 90 days horizon AbraSilver Resource Corp is expected to generate 0.52 times more return on investment than Defiance Silver. However, AbraSilver Resource Corp is 1.94 times less risky than Defiance Silver. It trades about 0.1 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.02 per unit of risk. If you would invest  163.00  in AbraSilver Resource Corp on August 31, 2024 and sell it today you would earn a total of  30.00  from holding AbraSilver Resource Corp or generate 18.4% return on investment over 90 days.

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

AbraSilver Resource Corp  vs.  Defiance Silver Corp

AbraSilver Resource Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AbraSilver Resource Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AbraSilver Resource reported solid returns over the last few months and may actually be approaching a breakup point.

Defiance Silver Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Defiance Silver may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with AbraSilver Resource and Defiance Silver

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

The idea behind AbraSilver Resource Corp and Defiance Silver 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.