Correlation Between Hansa Investment and Silvercorp Metals

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

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

Diversification Opportunities for Hansa Investment and Silvercorp Metals

0.51

Correlation Coefficient

Hansa Investment  Silvercorp Metals

Very weak diversification

The 3 months correlation between Hansa and Silvercorp is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Hansa Investment 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 Hansa Investment are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Hansa Investment i.e., Hansa Investment and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Hansa Investment and Silvercorp Metals

Assuming the 90 days trading horizon Hansa Investment is expected to under-perform the Silvercorp Metals. But the stock apears to be less risky and, when comparing its historical volatility, Hansa Investment is 2.83 times less risky than Silvercorp Metals. The stock trades about -0.04 of its potential returns per unit of risk. The Silvercorp Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Silvercorp Metals on September 3, 2024 and sell it today you would lose (25.00) from holding Silvercorp Metals or give up 5.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Hansa Investment  vs.  Silvercorp Metals

Hansa Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hansa Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Silvercorp Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvercorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Silvercorp Metals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hansa Investment and Silvercorp Metals

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

The idea behind Hansa Investment and Silvercorp Metals 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.