Correlation Between China Rare and Silver Elephant

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

By analyzing existing cross correlation between China Rare Earth and Silver Elephant Mining, you can compare the effects of market volatilities on China Rare and Silver Elephant 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 China Rare with a short position of Silver Elephant. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Rare and Silver Elephant.

Diversification Opportunities for China Rare and Silver Elephant

-0.61

Correlation Coefficient

China Rare  Silver Elephant

Excellent diversification

The 3 months correlation between China and Silver is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Rare Earth and Silver Elephant Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Elephant Mining and China Rare 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 China Rare Earth are associated (or correlated) with Silver Elephant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Elephant Mining has no effect on the direction of China Rare i.e., China Rare and Silver Elephant go up and down completely randomly.

Pair Corralation between China Rare and Silver Elephant

Assuming the 90 days horizon China Rare Earth is expected to generate 3.61 times more return on investment than Silver Elephant. However, China Rare is 3.61 times more volatile than Silver Elephant Mining. It trades about 0.17 of its potential returns per unit of risk. Silver Elephant Mining is currently generating about -0.05 per unit of risk. If you would invest  6.00  in China Rare Earth on May 7, 2025 and sell it today you would earn a total of  14.00  from holding China Rare Earth or generate 233.33% return on investment over 90 days.

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

China Rare Earth  vs.  Silver Elephant Mining

China Rare Earth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Rare Earth are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, China Rare reported solid returns over the last few months and may actually be approaching a breakup point.

Silver Elephant Mining

Risk-Adjusted Performance

Weakest

Over the last 90 days Silver Elephant Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Rare and Silver Elephant

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

The idea behind China Rare Earth and Silver Elephant 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.