Correlation Between Sandfire Resources and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Aurelia 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 Aurelia 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 Aurelia Metals, you can compare the effects of market volatilities on Sandfire Resources and Aurelia 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Aurelia Metals.
Diversification Opportunities for Sandfire Resources and Aurelia Metals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandfire and Aurelia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals 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 Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Aurelia Metals go up and down completely randomly.
Pair Corralation between Sandfire Resources and Aurelia Metals
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Aurelia Metals. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 3.11 times less risky than Aurelia Metals. The stock trades about -0.19 of its potential returns per unit of risk. The Aurelia Metals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Aurelia Metals on August 29, 2024 and sell it today you would lose (1.00) from holding Aurelia Metals or give up 5.26% 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. Aurelia Metals
Performance |
| Timeline |
| Sandfire Resources |
| Aurelia Metals |
Sandfire Resources and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Aurelia Metals
The main advantage of trading using opposite Sandfire Resources and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Aurelia 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Sandfire Resources vs. Dexus Convenience Retail | Sandfire Resources vs. Collins Foods | Sandfire Resources vs. ABACUS STORAGE KING | Sandfire Resources vs. Genetic Technologies |
| Aurelia Metals vs. Aristocrat Leisure | Aurelia Metals vs. Genetic Technologies | Aurelia Metals vs. Thorney Technologies | Aurelia Metals vs. Ras Technology Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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