Correlation Between Compania and Avino Silver

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

By analyzing existing cross correlation between Compania de Minas and Avino Silver Gold, you can compare the effects of market volatilities on Compania and Avino 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 Compania with a short position of Avino Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Avino Silver.

Diversification Opportunities for Compania and Avino Silver

0.46

Correlation Coefficient

Compania  Avino Silver

Very weak diversification

The 3 months correlation between Compania and Avino is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold and Compania 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 Compania de Minas are associated (or correlated) with Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of Compania i.e., Compania and Avino Silver go up and down completely randomly.

Pair Corralation between Compania and Avino Silver

Considering the 90-day investment horizon Compania is expected to generate 4.95 times less return on investment than Avino Silver. But when comparing it to its historical volatility, Compania de Minas is 1.81 times less risky than Avino Silver. It trades about 0.03 of its potential returns per unit of risk. Avino Silver Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Avino Silver Gold on August 31, 2024 and sell it today you would earn a total of  17.00  from holding Avino Silver Gold or generate 18.28% return on investment over 90 days.

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

Compania de Minas  vs.  Avino Silver Gold

Compania de Minas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Compania is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Avino Silver Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania and Avino Silver

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

The idea behind Compania de Minas and Avino Silver Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.