Correlation Between Summa Silver and Paiute Oil

Can any of the company-specific risk be diversified away by investing in both Summa Silver and Paiute Oil 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 Paiute Oil 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 Paiute Oil Mining, you can compare the effects of market volatilities on Summa Silver and Paiute Oil 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 Paiute Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Paiute Oil.

Diversification Opportunities for Summa Silver and Paiute Oil

0.0

Correlation Coefficient

Summa Silver  Paiute Oil

Pay attention - limited upside

The 3 months correlation between Summa and Paiute is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Paiute Oil Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiute Oil 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 Paiute Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiute Oil Mining has no effect on the direction of Summa Silver i.e., Summa Silver and Paiute Oil go up and down completely randomly.

Pair Corralation between Summa Silver and Paiute Oil

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Paiute Oil. But the otc stock apears to be less risky and, when comparing its historical volatility, Summa Silver Corp is 14.37 times less risky than Paiute Oil. The otc stock trades about -0.02 of its potential returns per unit of risk. The Paiute Oil Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Paiute Oil Mining on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Paiute Oil Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.23%
Values	Daily Returns

Summa Silver Corp  vs.  Paiute Oil Mining

Summa Silver Corp

Risk-Adjusted Performance

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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.

Paiute Oil Mining

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Paiute Oil is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Summa Silver and Paiute Oil

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

The idea behind Summa Silver Corp and Paiute Oil 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.