Correlation Between Summa Silver and Evolution Mining

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

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

Diversification Opportunities for Summa Silver and Evolution Mining

0.07

Correlation Coefficient

Summa Silver  Evolution Mining

Significant diversification

The 3 months correlation between Summa and Evolution is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Summa 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 Summa Silver Corp are associated (or correlated) with Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Summa Silver i.e., Summa Silver and Evolution Mining go up and down completely randomly.

Pair Corralation between Summa Silver and Evolution Mining

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Evolution Mining. In addition to that, Summa Silver is 1.5 times more volatile than Evolution Mining. It trades about -0.15 of its total potential returns per unit of risk. Evolution Mining is currently generating about -0.04 per unit of volatility. If you would invest  313.00  in Evolution Mining on September 25, 2024 and sell it today you would lose (28.00) from holding Evolution Mining or give up 8.95% of portfolio value over 90 days.

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

Summa Silver Corp  vs.  Evolution Mining

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp 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.

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Summa Silver and Evolution Mining

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

The idea behind Summa Silver Corp and Evolution 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.