Correlation Between Chalice Mining and Andean Silver

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

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

Diversification Opportunities for Chalice Mining and Andean Silver

0.86

Correlation Coefficient

Chalice Mining  Andean Silver

Very poor diversification

The 3 months correlation between Chalice and Andean is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of Chalice Mining i.e., Chalice Mining and Andean Silver go up and down completely randomly.

Pair Corralation between Chalice Mining and Andean Silver

Assuming the 90 days trading horizon Chalice Mining Limited is expected to generate 1.08 times more return on investment than Andean Silver. However, Chalice Mining is 1.08 times more volatile than Andean Silver Limited. It trades about 0.12 of its potential returns per unit of risk. Andean Silver Limited is currently generating about 0.04 per unit of risk. If you would invest  99.00  in Chalice Mining Limited on September 5, 2024 and sell it today you would earn a total of  35.00  from holding Chalice Mining Limited or generate 35.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Chalice Mining Limited  vs.  Andean Silver Limited

Chalice Mining

Risk-Adjusted Performance

9 of 100

OK

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

Andean Silver Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Silver Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Andean Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chalice Mining and Andean Silver

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

The idea behind Chalice Mining Limited and Andean Silver Limited 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.