Correlation Between Lynas Rare and Silver X

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

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

Diversification Opportunities for Lynas Rare and Silver X

0.34

Correlation Coefficient

Lynas Rare  Silver X

Weak diversification

The 3 months correlation between Lynas and Silver is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Silver X Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver X Mining and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Silver X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver X Mining has no effect on the direction of Lynas Rare i.e., Lynas Rare and Silver X go up and down completely randomly.

Pair Corralation between Lynas Rare and Silver X

Assuming the 90 days horizon Lynas Rare Earths is expected to under-perform the Silver X. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lynas Rare Earths is 2.79 times less risky than Silver X. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Silver X Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Silver X Mining on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Silver X Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lynas Rare Earths  vs.  Silver X Mining

Lynas Rare Earths

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lynas Rare Earths has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lynas Rare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Silver X Mining

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silver X Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Silver X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lynas Rare and Silver X

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

The idea behind Lynas Rare Earths and Silver X Mining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..