Correlation Between Metals X and Canada Silver

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

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

Diversification Opportunities for Metals X and Canada Silver

0.16

Correlation Coefficient

Metals X  Canada Silver

Average diversification

The 3 months correlation between Metals and Canada is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and Canada Silver Cobalt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Silver Cobalt and Metals X 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 Metals X Limited are associated (or correlated) with Canada Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Silver Cobalt has no effect on the direction of Metals X i.e., Metals X and Canada Silver go up and down completely randomly.

Pair Corralation between Metals X and Canada Silver

Assuming the 90 days horizon Metals X Limited is expected to under-perform the Canada Silver. But the pink sheet apears to be less risky and, when comparing its historical volatility, Metals X Limited is 1.04 times less risky than Canada Silver. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Canada Silver Cobalt is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Canada Silver Cobalt on September 22, 2024 and sell it today you would lose (3.00) from holding Canada Silver Cobalt or give up 23.08% of portfolio value over 90 days.

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

Metals X Limited  vs.  Canada Silver Cobalt

Metals X Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals X Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Canada Silver Cobalt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Silver Cobalt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Metals X and Canada Silver

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

The idea behind Metals X Limited and Canada Silver Cobalt 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.