Correlation Between Gatos Silver and Aftermath Silver

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

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

Diversification Opportunities for Gatos Silver and Aftermath Silver

0.94

Correlation Coefficient

Gatos Silver  Aftermath Silver

Almost no diversification

The 3 months correlation between Gatos and Aftermath is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Aftermath Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermath Silver and Gatos 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 Gatos Silver are associated (or correlated) with Aftermath Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermath Silver has no effect on the direction of Gatos Silver i.e., Gatos Silver and Aftermath Silver go up and down completely randomly.

Pair Corralation between Gatos Silver and Aftermath Silver

Assuming the 90 days trading horizon Gatos Silver is expected to generate 1.37 times less return on investment than Aftermath Silver. But when comparing it to its historical volatility, Gatos Silver is 1.43 times less risky than Aftermath Silver. It trades about 0.05 of its potential returns per unit of risk. Aftermath Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Aftermath Silver on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Aftermath Silver or generate 4.35% return on investment over 90 days.

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

Gatos Silver  vs.  Aftermath Silver

Gatos Silver

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gatos Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Aftermath Silver

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Gatos Silver and Aftermath Silver

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

The idea behind Gatos Silver and Aftermath Silver 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.