Correlation Between Premier Investments and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Premier Investments and Sandfire Resources 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 Premier Investments and Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Sandfire Resources NL, you can compare the effects of market volatilities on Premier Investments and Sandfire Resources 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 Premier Investments with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Sandfire Resources.
Diversification Opportunities for Premier Investments and Sandfire Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Sandfire is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Premier Investments 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 Premier Investments are associated (or correlated) with Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Premier Investments i.e., Premier Investments and Sandfire Resources go up and down completely randomly.
Pair Corralation between Premier Investments and Sandfire Resources
Assuming the 90 days trading horizon Premier Investments is expected to generate 0.84 times more return on investment than Sandfire Resources. However, Premier Investments is 1.2 times less risky than Sandfire Resources. It trades about 0.08 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.01 per unit of risk. If you would invest 3,307 in Premier Investments on September 15, 2024 and sell it today you would earn a total of 84.00 from holding Premier Investments or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Investments vs. Sandfire Resources NL
Performance |
| Timeline |
| Premier Investments |
| Sandfire Resources |
Premier Investments and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Sandfire Resources
The main advantage of trading using opposite Premier Investments and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Premier Investments vs. Global Data Centre | Premier Investments vs. Homeco Daily Needs | Premier Investments vs. Platinum Asset Management | Premier Investments vs. Kneomedia |
| Sandfire Resources vs. Premier Investments | Sandfire Resources vs. Aristocrat Leisure | Sandfire Resources vs. Alternative Investment Trust | Sandfire Resources vs. Australian Unity Office |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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