Correlation Between Silver Spruce and Portofino Resources

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

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

Diversification Opportunities for Silver Spruce and Portofino Resources

0.85

Correlation Coefficient

Silver Spruce  Portofino Resources

Very poor diversification

The 3 months correlation between Silver and Portofino is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources and Portofino Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portofino Resources and Silver Spruce 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 Silver Spruce Resources are associated (or correlated) with Portofino Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portofino Resources has no effect on the direction of Silver Spruce i.e., Silver Spruce and Portofino Resources go up and down completely randomly.

Pair Corralation between Silver Spruce and Portofino Resources

Assuming the 90 days horizon Silver Spruce Resources is expected to under-perform the Portofino Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Silver Spruce Resources is 1.42 times less risky than Portofino Resources. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Portofino Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.53  in Portofino Resources on September 29, 2024 and sell it today you would lose (0.51) from holding Portofino Resources or give up 33.33% of portfolio value over 90 days.

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

Silver Spruce Resources  vs.  Portofino Resources

Silver Spruce Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Spruce Resources 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 fundamental drivers 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.

Portofino Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Portofino Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Portofino Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Spruce and Portofino Resources

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

The idea behind Silver Spruce Resources and Portofino 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.