Correlation Between Silvercorp Metals and Endeavour Silver

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

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

Diversification Opportunities for Silvercorp Metals and Endeavour Silver

0.62

Correlation Coefficient

Silvercorp Metals  Endeavour Silver

Poor diversification

The 3 months correlation between Silvercorp and Endeavour is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp and Silvercorp Metals 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 Silvercorp Metals are associated (or correlated) with Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and Endeavour Silver go up and down completely randomly.

Pair Corralation between Silvercorp Metals and Endeavour Silver

Considering the 90-day investment horizon Silvercorp Metals is expected to under-perform the Endeavour Silver. But the stock apears to be less risky and, when comparing its historical volatility, Silvercorp Metals is 1.06 times less risky than Endeavour Silver. The stock trades about -0.01 of its potential returns per unit of risk. The Endeavour Silver Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  281.00  in Endeavour Silver Corp on September 3, 2024 and sell it today you would earn a total of  128.00  from holding Endeavour Silver Corp or generate 45.55% return on investment over 90 days.

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

Silvercorp Metals  vs.  Endeavour Silver Corp

Silvercorp Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvercorp Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Silvercorp Metals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Endeavour Silver Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Endeavour Silver disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silvercorp Metals and Endeavour Silver

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

The idea behind Silvercorp Metals and Endeavour Silver Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.