Correlation Between Defiance Silver and First Tellurium

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

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

Diversification Opportunities for Defiance Silver and First Tellurium

0.19

Correlation Coefficient

Defiance Silver  First Tellurium

Average diversification

The 3 months correlation between Defiance and First is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and First Tellurium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tellurium Corp and Defiance Silver 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 Defiance Silver Corp are associated (or correlated) with First Tellurium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tellurium Corp has no effect on the direction of Defiance Silver i.e., Defiance Silver and First Tellurium go up and down completely randomly.

Pair Corralation between Defiance Silver and First Tellurium

Assuming the 90 days horizon Defiance Silver is expected to generate 4.42 times less return on investment than First Tellurium. In addition to that, Defiance Silver is 1.24 times more volatile than First Tellurium Corp. It trades about 0.02 of its total potential returns per unit of risk. First Tellurium Corp is currently generating about 0.09 per unit of volatility. If you would invest  7.90  in First Tellurium Corp on August 31, 2024 and sell it today you would earn a total of  1.97  from holding First Tellurium Corp or generate 24.94% return on investment over 90 days.

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

Defiance Silver Corp  vs.  First Tellurium Corp

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.

First Tellurium Corp

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Defiance Silver and First Tellurium

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

The idea behind Defiance Silver Corp and First Tellurium 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.