Correlation Between Sandfire Resources and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Adriatic 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 Sandfire Resources and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources NL and Adriatic Metals Plc, you can compare the effects of market volatilities on Sandfire Resources and Adriatic 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 Sandfire Resources with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Adriatic Metals.
Diversification Opportunities for Sandfire Resources and Adriatic Metals
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandfire and Adriatic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Adriatic Metals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals Plc and Sandfire Resources 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 Sandfire Resources NL are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals Plc has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Adriatic Metals go up and down completely randomly.
Pair Corralation between Sandfire Resources and Adriatic Metals
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Adriatic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 2.53 times less risky than Adriatic Metals. The stock trades about -0.04 of its potential returns per unit of risk. The Adriatic Metals Plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 414.00 in Adriatic Metals Plc on August 30, 2024 and sell it today you would lose (2.00) from holding Adriatic Metals Plc or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Adriatic Metals Plc
Performance |
| Timeline |
| Sandfire Resources |
| Adriatic Metals Plc |
Sandfire Resources and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Adriatic Metals
The main advantage of trading using opposite Sandfire Resources and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Adriatic 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| Sandfire Resources vs. Northern Star Resources | Sandfire Resources vs. Evolution Mining | Sandfire Resources vs. Bluescope Steel | Sandfire Resources vs. Aneka Tambang Tbk |
| Adriatic Metals vs. Charter Hall Education | Adriatic Metals vs. Carlton Investments | Adriatic Metals vs. Sandon Capital Investments | Adriatic Metals vs. Janison Education Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |