Correlation Between Klondike Silver and Silver Grail

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

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

Diversification Opportunities for Klondike Silver and Silver Grail

-0.11

Correlation Coefficient

Klondike Silver  Silver Grail

Good diversification

The 3 months correlation between Klondike and Silver is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Silver Grail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Grail Resources and Klondike 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 Klondike Silver Corp are associated (or correlated) with Silver Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Grail Resources has no effect on the direction of Klondike Silver i.e., Klondike Silver and Silver Grail go up and down completely randomly.

Pair Corralation between Klondike Silver and Silver Grail

Given the investment horizon of 90 days Klondike Silver Corp is expected to generate 1.99 times more return on investment than Silver Grail. However, Klondike Silver is 1.99 times more volatile than Silver Grail Resources. It trades about 0.06 of its potential returns per unit of risk. Silver Grail Resources is currently generating about -0.1 per unit of risk. If you would invest  2.00  in Klondike Silver Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Klondike Silver Corp or generate 0.0% return on investment over 90 days.

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

Klondike Silver Corp  vs.  Silver Grail Resources

Klondike Silver Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Klondike Silver Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Klondike Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Silver Grail Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Grail Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Klondike Silver and Silver Grail

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

The idea behind Klondike Silver Corp and Silver Grail Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.