Correlation Between Gold Road and Andean Silver

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

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

Diversification Opportunities for Gold Road and Andean Silver

-0.1

Correlation Coefficient

Gold Road  Andean Silver

Good diversification

The 3 months correlation between Gold and Andean is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Andean Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver and Gold Road 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 Gold Road Resources are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver has no effect on the direction of Gold Road i.e., Gold Road and Andean Silver go up and down completely randomly.

Pair Corralation between Gold Road and Andean Silver

Assuming the 90 days trading horizon Gold Road is expected to generate 8.71 times less return on investment than Andean Silver. But when comparing it to its historical volatility, Gold Road Resources is 3.04 times less risky than Andean Silver. It trades about 0.05 of its potential returns per unit of risk. Andean Silver is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Andean Silver on April 25, 2025 and sell it today you would earn a total of  39.00  from holding Andean Silver or generate 38.61% return on investment over 90 days.

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

Gold Road Resources  vs.  Andean Silver

Gold Road Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gold Road is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Andean Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Andean Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Road and Andean Silver

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

The idea behind Gold Road Resources and Andean Silver 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.