Correlation Between Discovery Silver and Silvercorp Metals

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

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

Diversification Opportunities for Discovery Silver and Silvercorp Metals

0.56

Correlation Coefficient

Discovery Silver  Silvercorp Metals

Very weak diversification

The 3 months correlation between Discovery and Silvercorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Discovery Silver Corp and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Discovery 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 Discovery Silver Corp are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Discovery Silver i.e., Discovery Silver and Silvercorp Metals go up and down completely randomly.

Pair Corralation between Discovery Silver and Silvercorp Metals

Assuming the 90 days trading horizon Discovery Silver is expected to generate 1.21 times less return on investment than Silvercorp Metals. In addition to that, Discovery Silver is 1.3 times more volatile than Silvercorp Metals. It trades about 0.08 of its total potential returns per unit of risk. Silvercorp Metals is currently generating about 0.13 per unit of volatility. If you would invest  499.00  in Silvercorp Metals on April 22, 2025 and sell it today you would earn a total of  133.00  from holding Silvercorp Metals or generate 26.65% return on investment over 90 days.

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

Discovery Silver Corp  vs.  Silvercorp Metals

Discovery Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Discovery Silver Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Discovery Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Silvercorp Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercorp Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Silvercorp Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Discovery Silver and Silvercorp Metals

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

The idea behind Discovery Silver Corp and Silvercorp Metals 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 Stocks Directory module to find actively traded stocks across global markets.