Correlation Between Southern Silver and Guanajuato Silver

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

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

Diversification Opportunities for Southern Silver and Guanajuato Silver

0.76

Correlation Coefficient

Southern Silver  Guanajuato Silver

Poor diversification

The 3 months correlation between Southern and Guanajuato is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Southern Silver Exploration and Guanajuato Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guanajuato Silver and Southern 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 Southern Silver Exploration are associated (or correlated) with Guanajuato Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guanajuato Silver has no effect on the direction of Southern Silver i.e., Southern Silver and Guanajuato Silver go up and down completely randomly.

Pair Corralation between Southern Silver and Guanajuato Silver

Assuming the 90 days horizon Southern Silver Exploration is expected to under-perform the Guanajuato Silver. In addition to that, Southern Silver is 1.17 times more volatile than Guanajuato Silver. It trades about -0.04 of its total potential returns per unit of risk. Guanajuato Silver is currently generating about 0.01 per unit of volatility. If you would invest  21.00  in Guanajuato Silver on September 11, 2024 and sell it today you would lose (1.00) from holding Guanajuato Silver or give up 4.76% of portfolio value over 90 days.

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

Southern Silver Exploration  vs.  Guanajuato Silver

Southern Silver Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Silver Exploration 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.

Guanajuato Silver

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guanajuato Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Guanajuato 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 Southern Silver and Guanajuato Silver

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

The idea behind Southern Silver Exploration and Guanajuato 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.