Correlation Between IMPACT Silver and Kootenay Silver

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

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

Diversification Opportunities for IMPACT Silver and Kootenay Silver

0.62

Correlation Coefficient

IMPACT Silver  Kootenay Silver

Poor diversification

The 3 months correlation between IMPACT and Kootenay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IMPACT Silver Corp and Kootenay Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kootenay Silver and IMPACT 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 IMPACT Silver Corp are associated (or correlated) with Kootenay Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kootenay Silver has no effect on the direction of IMPACT Silver i.e., IMPACT Silver and Kootenay Silver go up and down completely randomly.

Pair Corralation between IMPACT Silver and Kootenay Silver

Assuming the 90 days horizon IMPACT Silver Corp is expected to generate 1.48 times more return on investment than Kootenay Silver. However, IMPACT Silver is 1.48 times more volatile than Kootenay Silver. It trades about 0.04 of its potential returns per unit of risk. Kootenay Silver is currently generating about -0.01 per unit of risk. If you would invest  23.00  in IMPACT Silver Corp on September 14, 2024 and sell it today you would earn a total of  1.00  from holding IMPACT Silver Corp or generate 4.35% return on investment over 90 days.

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

IMPACT Silver Corp  vs.  Kootenay Silver

IMPACT Silver Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IMPACT Silver Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IMPACT Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kootenay Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kootenay Silver is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IMPACT Silver and Kootenay Silver

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

The idea behind IMPACT Silver Corp and Kootenay 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.