Correlation Between Silvercorp Metals and MAG Silver

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

Diversification Opportunities for Silvercorp Metals and MAG Silver

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Silvercorp and MAG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Silvercorp Metals and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG 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 MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Silvercorp Metals i.e., Silvercorp Metals and MAG Silver go up and down completely randomly.

Pair Corralation between Silvercorp Metals and MAG Silver

Considering the 90-day investment horizon Silvercorp Metals is expected to generate 1.01 times more return on investment than MAG Silver. However, Silvercorp Metals is 1.01 times more volatile than MAG Silver Corp. It trades about 0.01 of its potential returns per unit of risk. MAG Silver Corp is currently generating about -0.01 per unit of risk. If you would invest  366.00  in Silvercorp Metals on December 30, 2023 and sell it today you would lose (40.00) from holding Silvercorp Metals or give up 10.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Silvercorp Metals  vs.  MAG Silver Corp

 Performance 
       Timeline  
Silvercorp Metals 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Silvercorp Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Silvercorp Metals displayed solid returns over the last few months and may actually be approaching a breakup point.
MAG Silver Corp 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MAG Silver is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Silvercorp Metals and MAG Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silvercorp Metals and MAG Silver

The main advantage of trading using opposite Silvercorp Metals and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silvercorp Metals position performs unexpectedly, MAG 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 MAG Silver will offset losses from the drop in MAG Silver's long position.
The idea behind Silvercorp Metals and MAG 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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